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What is the decision based on irr

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Andrew is evaluating two independent projects for ABX Pty Ltd.
The costs and expected cash flows are given in the following table. The company's cost of capital is 8 per cent. (10 Marks).

Year A

0   -$350,000
1   125,000
2   125,000
3   125,000
4   125,000
5   125,000

B

0    -$380,000

1     160,000

2   156,000

3   165,000

4  172, 000

5  200, 000

Problem A. Calculate the project's NPV.

Problem B. Calculate the project's IRR.

Problem C. What is the decision based on NPV? What is the decision based on IRR? Is there a conflict?

Problem D. As the finance manager for the company, which project or projects will be accepted? Explain your reasoning.

Reference no: EM132665806

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