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XYZ is a company located in Italy, the company manufacturesmachine parts. It is currently involved in making a decisionconcerning the acquisition of new machining tool. Two differentversions of the tool are available: X AND Y. The forecasted cashflows of the two alternative are listed below; XYZ normally usespayback with a 3-year criterion. NET CASH FLOWS ($000s) Tool X Year0 -1000, Year 1 +400, Year 2 +600, Year 3 +187, Tool Y Year 0 -450,Year 1+300, Year 2+150, Year 3+106. XYZ faces a perfect capitalmarket, in which the interest rate for the projects' risk level is5%. Required: (a) Using the Payback and the IRR decisions rule,indicate which projects the company should accept and state clearlythe reasons for your decisions. (b) How would your conclusions in(a) will change if the projects were mutually exclusive? (c) Stateclearly any limitations and assumptions that you made in yourcalculations.