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Question
Two projects being considered are mutually exclusive and have the following projected cash flows:
Year Project A Project B
0 u2212$50,000 u2212$50,000
1 15,625 0
2 15,625 0
3 15,625 0
4 15,625 0
5 15,625 99,500
If the required rate of return on these projects is 10 percent, which would be chosen and why?
a. Project B because of higher NPV.
b. Project B because of higher IRR.
c. Project A because of higher NPV.
d. Project A because of higher IRR.
e. Neither, because both have IRRs less than the required return.
Answer
This answer is hidden. It contains 500 characters.
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