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Question 2 Scenario: Consider the following cash flows for Projects M and N: Year Project M Project N 0 -60000 -100000 1 15000 25000 2
Question 2
Scenario: Consider the following cash flows for Projects M and N:
Year | Project M | Project N |
0 | -60000 | -100000 |
1 | 15000 | 25000 |
2 | 12000 | 30000 |
3 | 10000 | 27000 |
4 | 9000 | 35000 |
5 | 7000 | 40000 |
6 | 6000 | 45000 |
Requirements: a. Calculate the NPV for each project with a required rate of return of 12 percent. b. Find the IRR for each project. c. Determine the traditional payback period for each project. d. Which project should be selected if they are independent? e. Which project should be selected if they are mutually exclusive?
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