Gamma Retailers has the following projected cash flows for two projects, both requiring an initial...
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Accounting
Gamma Retailers has the following projected cash flows for two projects, both requiring an initial investment of $30,000:
Year | Cash Flows (Project X) | Cash Flows (Project Y) |
0 | -30,000 | -30,000 |
1 | 10,000 | 15,000 |
2 | 10,000 | 15,000 |
3 | 10,000 | 10,000 |
4 | 15,000 | 5,000 |
a. Calculate the internal rate of return (IRR) for both projects. b. If the required rate of return is 8%, which project should Gamma Retailers select?
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