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Mulroney corp is considering two mutually exclusive projects. Both require an inital investment of $10,000 at t=0. Project x has an expected life of 2 years with after tax cash inflows of $6,000 and $8,000 at the end of years 1 and 2 respectively. Project y has an expected life of 4 years with after tax cash inflows of $4,300 at the end of each of the next 4 years. Each project has a WACC of 10%. Use the replacement chain approach to determine the NPV of the most profitable project.

Financial Management, Finance

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