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Two mutually exclusive projects have the following forecasted cash flows: Year A B 0 -20,000 -20,000 1 10,000 0 2 10,000 0 3 10,000 0

  1. Two mutually exclusive projects have the following forecasted cash flows:

Year A B

0 -20,000 -20,000

1 10,000 0

2 10,000 0

3 10,000 0

4 10,000 60,000

  1. Compute the internal rate of return for each project.
  2. Compute the NPV for each project if the required rate is 10%.
  3. Which project should be accepted, and why?

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