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Two mutually exclusive projects offer the following cash flows: Year CF1 CF2 0 -22000 -22000 1 8000 2000 2 10000 12000 3 12000 10000 4
Two mutually exclusive projects offer the following cash flows:
Year CF1 CF2
0 -22000 -22000
1 8000 2000
2 10000 12000
3 12000 10000
4 2000 1000
a) What is the IRR of each of the projects? Which project should the company accept if required rate of return =11%?
b) If the required return is 11% what is the NPV for each of the projects?
c) Profitability index
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