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Two mutually exclusive investment projects have the following forecasted Cash flows: Year Project a Project B 0 -$20,000 -$20,000 1 $10,000 0 2 $10,000 0
Two mutually exclusive investment projects have the following forecasted Cash flows:
Year Project a Project B
0 -$20,000 -$20,000
1 $10,000 0
2 $10,000 0
3 $10000 0
4 $10000 0
a) Compute the internal rate of return for each project
b) compute the net present value for each project if the firm has a 10% cost of capital
c) which project should be adopted? Why?
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