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Unformatted text preview: $225 $225 B$600 $300 $300 $50 $50 $49 Which project, A or B, would you recommend and why? Use the following information to answer questions 4 thru 6 below: Year: 0 1 2 3 4 5 Project A Cash Flows: 7,000 1,500 2,300 2,400 1,000 1,700 Project B Cash Flows: 7,000 1,000 2,900 2,500 1,000 1,800 The cost of capital for both projects is 6%. 4) What is the IRR for Project A? 5) What is the payback for Project B? 6) a) If Projects A and B are mutually exclusive, which project(s) should be accepted? b) If Projects A and B are independent, which project(s) should be accepted? 7) Calculate the Modified IRR for the following cash flows if the cost of capital is 10%: Year: 1 2 3 Cash Flows: 1,200 500 700 300...
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 Winter '08
 sloan
 Management

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