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Q3: Kalta Motor's is considering one of two mutually exclusive projects. Project A requires an initial investment of $200,000 and generates net income of $60,000
Q3: Kalta Motor's is considering one of two mutually exclusive projects. Project A requires an initial investment of $200,000 and generates net income of $60,000 every year for the next 5 years. Project B would involve an investment of $300,000 and would return net income of $70,000 every year for the next 8 years. Required: Calculate a) The average rate of return of the two projects b) The payback period for the two projects c) The Net Present Value of the two projects using a discount rate of 10% d) The IRR of the two projects. e) Which project should Kalta Motor's choose? And Why
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