XYZ Ltd. is considering two projects, Project A and Project B, both requiring an initial...
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Accounting
XYZ Ltd. is considering two projects, Project A and Project B, both requiring an initial investment of $100,000. The after-tax cash flows are as follows:
Year
Project A (USD)
Project B (USD)
0
(100,000)
(100,000)
1
30,000
20,000
2
40,000
30,000
3
50,000
50,000
4
60,000
70,000
5
70,000
80,000
Requirements: a. Compute the payback period for both projects. b. Calculate the IRR for both projects. c. Based on IRR, which project should be selected?
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