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Omega Enterprises has two potential projects, Project I and Project J: Project I : Year Cash Flow ($) 0 -180,000 1 25,000 2 50,000 3
Omega Enterprises has two potential projects, Project I and Project J:
Project I:
Year | Cash Flow ($) |
0 | -180,000 |
1 | 25,000 |
2 | 50,000 |
3 | 75,000 |
4 | 100,000 |
Project J:
Year | Cash Flow ($) |
0 | -190,000 |
1 | 35,000 |
2 | 60,000 |
3 | 85,000 |
4 | 95,000 |
The discount rates are 7% for Project I and 9% for Project J.
a) Calculate the payback period for each project.
b) Calculate the IRR for each project.
ii. Which project should be accepted based on the IRR rule?
c) Calculate the NPV for each project.
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