Consider two mutually exclusive projects with the following cash flows:Project GInitial Investment: $5,000,000Year 1: $1,500,000Year...
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Accounting
Consider two mutually exclusive projects with the following cash flows:
Project G
- Initial Investment: $5,000,000
- Year 1: $1,500,000
- Year 2: $2,000,000
- Year 3: $2,500,000
Project H
- Initial Investment: $4,500,000
- Year 1: $1,200,000
- Year 2: $1,500,000
- Year 3: $2,000,000
a. Calculate the NPV of each project assuming a 7% cost of capital. b. Determine the IRR for each project. c. Assess the payback period. d. Recommend which project to proceed with and justify your decision.
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