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Project Alpha requires an outlay of $10,000 immediately. Project Alpha has a 1-year life and is expected to produce a net cash flow at the end of one year of $20,000. Project Beta, a mutually exclusive alternative to Alpha, requires an outlay of $20,000 immediately. It, too, is expected to have a 1-year life and to produce a net cash flow at the end of one year of $35,000.

Compare the internal rate of return for both projects. Compute the NPV for both projects, using a cost of capital of 10 percent.

Which projects should be undertaken?

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M9868088

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