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Xerox Ltd. is an existing profit-making company. It is engaged in the manufacture of complex photocopiers and scanners. The project with the following costs and
Xerox Ltd. is an existing profit-making company. It is engaged in the manufacture of complex photocopiers and scanners. The project with the following costs and cash flows are being considered by the company:
Project I Project II
$ $
0 (240,000) (240,000)
1 62,000 142,000
2 70,000 70,000
3 100,000 82,000
4 140,000 40,000
The company's cost of capital is 15%
i) Calculate the NPV of both the projects.
ii) Calculate the IRR of both the projects.
iii) Comment on calculations in (i) and (ii) above.
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