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Which project should be selected

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Farrah Corporation is considering two projects (see below). For your analysis, assume these projects are mutually exclusive with a required rate of return of 12%.

Project 1Project 2Initial investment$185,000$1,100,000Cash inflow Year 1$230,000$1,450,000

Compute the following for each project:

-NPV (net present value)

-PI (profitability index)

-IRR (internal rate of return)

Which project should be selected? Why?

Reference no: EM132494918

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