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Zeta Ltd. has two project options. Project G requires an initial investment of $45,000 with expected cash flows of: Year 1: $12,000 Year 2: $15,000

Zeta Ltd. has two project options. Project G requires an initial investment of $45,000 with expected cash flows of:

  • Year 1: $12,000
  • Year 2: $15,000
  • Year 3: $18,000

Project H requires an initial outlay of $55,000 with projected cash flows of:

  • Year 1: $16,000
  • Year 2: $20,000
  • Year 3: $24,000
Requirements:
  1. Compute the NPV for each project at a 10% discount rate.
  2. Calculate the IRR for each project.
  3. Evaluate the Profitability Index (PI) for each project.
  4. Assess which project Zeta Ltd. should invest in based on NPV, IRR, and PI.

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