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You are considering two investment projects, each of which requires an up-front expenditure of $25 million. The investments will produce the following affer-tax cash ffows
You are considering two investment projects, each of which requires an up-front expenditure of $25 million. The investments will produce the following affer-tax cash ffows fin million dollars) 1. What is project As payback period? 5 points 2. If the two projects are independent and the cost of cagital is 10%, which project or projects should be taken? 10 polints 3. If the two projects are mutually exclusive, which project should be taken? (Hint, construct the NPV profle far 5,10,15, and 20 porcent cost of capital). 15 points 4. What is the cross-over rate? 10 points 5. If the cost of capital is 10%, what is the MuRR (Modified internal rate of retum) of projoct A? 10 points
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