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Problem 10-13 NPV and IRR Analysis Cummings Products Company is considering two mutually exclusive investments whose expected net cash flows are as follows: EXPECTED NET

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Problem 10-13 NPV and IRR Analysis Cummings Products Company is considering two mutually exclusive investments whose expected net cash flows are as follows: EXPECTED NET CASH FLOWS Year Project A $300 -387 -193 100 600 600 850 -180 Project E $405 134 134 134 134 134 134 134 4 a. Construct NPV profiles for Projects A and B. Select the correct graph. NP ) NPWS NP49 NPV Project B Project A Project B Project A 800 600 400 800 800 800 600 600 600 400 400 400 200 200 200 200 Project A Project B Project A Project B 5 10 15 Cost of capital(%) 5 10 15 20 25 2 25 5 10 15 2 25 5 10 15 20 25 Cost of capital( ) Cost of capital(9) Cost of capital(%) 200 200 200 200 400 400 400 -400

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