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You were asked to decide whether to accept or to reject one of the two following mutually exclusive projects ( note: you can accept only
You were asked to decide whether to accept or to reject one of the two following mutually exclusive projects note: you can accept only one, but not both projects:
The projects will pay the following cash flows at the end of each year:
Year Project A Project B
A What are the Internal Rates of Return for Project A and Project B
B Assume that the required rates of return for both projects are identical, but the only thing you know is that the discount rate is a value between and Can your answer in part A help you determine which project, if any, should be undertaken? Why or why not?
C Assume, instead, that the required return for both projects is Which project, if any, should be undertaken and why?
D Assume, instead, that the required return for both projects is but a project can be undertaken only if it pays back in years or faster. Which project, if any, should be undertaken and why?
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