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The following are the cash flows for projects I and J: Project I: Year 0: -$100,000 Year 1: $30,000 Year 2: $35,000 Year 3: $40,000

The following are the cash flows for projects I and J:

Project I:

  • Year 0: -$100,000
  • Year 1: $30,000
  • Year 2: $35,000
  • Year 3: $40,000
  • Year 4: $45,000

Project J:

  • Year 0: -$120,000
  • Year 1: $32,000
  • Year 2: $37,000
  • Year 3: $42,000
  • Year 4: $47,000

a. Calculate the NPV, IRR, and traditional payback period for each project, with a required rate of return of 11 percent.

b. If the projects are independent, which project(s) should be selected? If they are mutually exclusive, which project should be selected?

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