Company X is considering two mutually exclusive projects with the following cash flows:YearProject AProject B0-$3,500,000-$3,000,0001$1,000,000$900,0002$1,500,000$1,200,0003$1,800,000$1,600,0004$2,000,000$2,500,000Requirements:1.Estimate...
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Accounting
Company X is considering two mutually exclusive projects with the following cash flows:
YearProject AProject B
0-$3,500,000-$3,000,000
1$1,000,000$900,000
2$1,500,000$1,200,000
3$1,800,000$1,600,000
4$2,000,000$2,500,000
Requirements:
1.Estimate the NPV of each project assuming a cost of capital of 12%.
2.Calculate the IRR for each project.
3.Determine the payback period for each project.
4.Recommend which project should be undertaken based on NPV and IRR.
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