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Jefferson International is trying to choose between the following two mutually exclusive design projects. The required return is 12 percent. If the company applies the
Jefferson International is trying to choose between the following two mutually exclusive design projects. The required return is 12 percent. If the company applies the internal rate of return (IRR) decision rule, which project should the firm accept? If the company applies the NPV decision rule, which project should it take? Given your first two answers, which project should the firm actually accept?
Year | Project A | Project B |
0 | -$75,000 | -$38,000 |
1 | $32,400 | $17,800 |
2 | $30,200 | $14,200 |
3 | $36,600 | $19,800 |
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