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Bumble’s Bees, Inc., has identified the following two mutually exclusive projects: Bumble’s Bees, Inc., has identified...

Bumble’s Bees, Inc., has identified the following two mutually exclusive projects:

Bumble’s Bees, Inc., has identified the following two mutually exclusive projects:

Year

Cash Flow (A)

Cash Flow (B)

0

-17,000

-17,000

1

8,000

2,000

2

7,000

5,000

3

5,000

9,000

4

3,000

9,500
  1. Calculate the Internal Rate of Return (IRR) for each of the project using Trial and Error method.
  2. Apply the IRR decisionrule, which project should the company accept?
  3. If the required return is 11 percent, evaluate the NPV for each of these projects?
  4.   Which project will you choose if you apply the NPV decision rule?
  5. Manager of Bumble’s Bees, Inc want to know the payback period of each project. Make necessary calculations to find the payback period of Project A and Project B.

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Expert Solution

jeff jeffy answered 1 year ago
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