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Projects A and B are mutually exclusive and have the following cash flows: Year Project A Project B 0 -$82,000 -$82,000 1 34,000 0 2

Projects A and B are mutually exclusive and have the following cash flows:

Year Project A Project B
0 -$82,000 -$82,000
1 34,000 0
2 34,000 0
3 34,000 108,000

1. What is the crossover rate?

2. Do we have a conflict in ranking between the NPV and IRR methods if the required rate of return is 8%?

3. Which project should be accepted if the required rate of return is 5%?

4. Which project should be accepted if the required rate of return is 12%?

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