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Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown below. The required rate of return on projects of both of their risk class is 10 percent, and that the maximum allowable payback and discounted payback statistic for the projects are 2 and 3 years, respectively. Time: 0 1 2 3 Project A Cash Flow -32,000 22,000 42,000 13,000 Project B Cash Flow -42,000 22,000 32,000 62,000 Use the NPV decision rule to evaluate these projects; which one(s) should be accepted or rejected? ? accept neither A nor B ? reject A, accept B ? accept A, reject B ? accept both A and B

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92399454

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