Calculate the NPV of both projects

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There are two alternative (mutually exclusive) projects. The first project promises a profit of $100,000 in each of the next four years, while the second project promises a profit of $75,000 in each of the next six years.

a. Calculate the NPV of both projects if the discount rate of the firm is 10 percent.

b. Determine and explain which of two investment projects a manager should choose in (a).

c. Calculate the NPV of both projects if the discount rate of the firm is 20 percent.

d. Determine and explain which of two investment projects a manager should choose in (b).

e. Explain the difference in the decisions in (b) and (d) if any.

Reference no: EM131865006

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