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The MHA Medical Center expects Project A and Project B to generate the following cash flows: Project A ( in thousands ) Year 0 1

The MHA Medical Center expects Project A and Project B to generate the following cash flows: Project A (in thousands) Year 012345 Initial investment ($20,000) Net operating cash flows ($10,000) $8,000 $12,000 $15,000 $26,000 Project B (in thousands) Year 012345 Initial investment ($28,000) Net operating cash flows $8,000 $8,000 $8,000 $8,000 $8,0001.) Compute the payback for both projects. Show your calculation below: 2.) Compute the Net Present Value (NPV) manually (i.e., do not use excel spread sheet) for both projects at a cost of capital of 20%. Show your calculation below: (Hint: Use the Present Value Factors presented Zelmans textbook pp.297-298).3.) Based on the results from two different calculations above, which project do you prefer to implement? Explain.

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