XYZ Ltd. is analyzing the following two projects:Project Alpha:Year 0: -$5,000,000Year 1: $1,200,000Year 2: $1,500,000Year...
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Accounting
XYZ Ltd. is analyzing the following two projects:
Project Alpha:
- Year 0: -$5,000,000
- Year 1: $1,200,000
- Year 2: $1,500,000
- Year 3: $2,000,000
- Year 4: $3,000,000
Project Beta:
- Year 0: -$4,000,000
- Year 1: $1,000,000
- Year 2: $1,800,000
- Year 3: $2,200,000
- Year 4: $2,500,000
Requirements:
- Calculate the NPV for each project using a discount rate of 10%.
- Determine the IRR for both projects.
- Evaluate the payback period for each project.
- Suggest the preferred project based on the NPV, IRR, and payback period.
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