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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