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You are evaluating two potential projects that have the following cash flows: Time 0 1 2345 Project A -$25,000 $6,000 $6,000 $7,000 $8,000 $9,000 Project

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You are evaluating two potential projects that have the following cash flows: Time 0 1 2345 Project A -$25,000 $6,000 $6,000 $7,000 $8,000 $9,000 Project B -$50,000 $16,500 $15,000 $13,000 $11,000 $9,000 1. For each project determine: a. Payback Period b. Discounted payback period assuming a required return of 9% C. NPV d. IRR e. Profitability index 2. If the two projects are mutually exclusive and you require a return of 9%, which project would you select? Why? At what rate are you indifferent between the two projects? (What is the crossover rate?) 3. 4. Create a single chart showing NPV profiles of both projects for required return rates up to 20%. (NPV on the y-axis with required return on the x-axis)

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