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Your company is currently pursuing three cost reduction projects at the same time. Project A requires an investment of $10 million. It is expected to
Your company is currently pursuing three cost reduction projects at the same time. Project A requires an investment of $10 million. It is expected to yield a cost savings of $30 million in the first year and another $10 million in the second year. Project B demands an investment of $5 million. It is expected to produce a cost savings of $5 million in the first year and another $20 million in the second year. Project C needs an investment of $7.5 million. It is expected to bring about a cost savings of $10 million in the first year and another $15 million in the second year, After the second year, there will be no receivable benefit or capital recovery from any of these projects. The cost of capital (interest rate) is ) 15% per year. Determine the ranking of these projects on the basis of the evaluation criteria of NPV, IRR, PB, and PI
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