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Company A is considering the following two mutually exclusive projects. Company A bases their capital budgeting...

Company A is considering the following two mutually exclusive projects. Company A bases their capital budgeting decisions solely on the NPV criteria. (Do not round intermediate calculations. Round your final answer to two decimal places.)

Year Project 1 Project 2
0 -$75,000 -$75,000
1 $50,000 $20,000
2 $30,000 $21,000
3 $15,000 $59,000

1. At what required rate of return (%) is Company A indifferent between the two projects?

2. If the required rate of return is less than the crossover rate, which project(s) should they choose?

Both projects   

Neither project   

Project 2   

OR Project 1

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Expert Solution

jeff jeffy answered 1 year ago
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