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Question 4 (25 points): Two mutually exclusive investments have the following cash flows and both need to have a minimum rate of return is 15%

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Question 4 (25 points): Two mutually exclusive investments have the following cash flows and both need to have a minimum rate of return is 15% for the first five years and 10% for the last five years. Which project would you recommend for funding using NPV analysis. Project A: CF Year C=-6,000 0 I=1000 1 I=1100 I=1200 1=1300 ... 1-1300 2 3 4 ... 10 L=$2,600 Project B: I=1350 I=1350 I=1350 ... 2 3 4 ... 1=1350 10 CF C=-6,500 I=1350 Year 0 1 C: Cost, I: Income, L: Salvage Value L=$8,500

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