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  3. two projects are under consideration:project o:ini

Two projects are under consideration:Project O:Initial Investment: -$6,000,000Year 1: $1,500,000Year 2: $2,000,000Year 3: $2,500,000Year 4:...

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Accounting

Two projects are under consideration:

  • Project O:
    • Initial Investment: -$6,000,000
    • Year 1: $1,500,000
    • Year 2: $2,000,000
    • Year 3: $2,500,000
    • Year 4: $3,000,000
  • Project P:
    • Initial Investment: -$7,000,000
    • Year 1: $1,700,000
    • Year 2: $2,200,000
    • Year 3: $2,700,000
    • Year 4: $3,500,000
Requirements:

a. Calculate the NPV of each project at a discount rate of 9%. b. Determine the IRR for each project. c. Assess the profitability index for both projects. d. Analyze which project should be preferred based on NPV and IRR.

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