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Problem 1 Mutually Exclusive Choices The required rate of return (discount rate) is 20%. Our firm evaluates two mutually exclusive projects A and B.

Problem 1 Mutually Exclusive Choices The required rate of return (discount rate) is 20%. Our firm evaluates two mutually exclusive projects A and B. Their cash flows are given in the following table: Year A B 0 -3,000 -4,000 1 ?? 5,200 1. If the IRR of project A is 30%, what is the cash flow of the project in year 1? 2. Which project should be selected?

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