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Suppose your firm is considering two mutually exclusive,required projects with the cash flows shown as follows. Therequired rate of return on projects of both of their risk class is10 percent, and the maximum allowable payback and discountedpayback statistic for the projects are two and a half and three anda half years, respectively. Calculate the payback and use thepayback decision rule to evaluate these projects; which one(s)should be accepted or rejected and why? Trying to solve manuallywith calculator and not in excel.time0123project a-1,000300400700project b-500200400300
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