WXY Holdings is considering two mutually exclusive projects. Each project requires an initial investment of...
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Accounting
WXY Holdings is considering two mutually exclusive projects. Each project requires an initial investment of $1,000,000. The projected cash inflows are as follows:
Year
Project E
Project F
0
-$1,000,000
-$1,000,000
1
$250,000
$350,000
2
$300,000
$300,000
3
$350,000
$250,000
4
$400,000
$200,000
a.Compute the payback period for both projects. b. Using a discount rate of 11%, calculate the NPV for both projects and indicate which project should be selected.
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