Question: 1. A company plans to launch two mutually exclusive projects and requires rate of return of 12 %. The cost and expected cash flows from

1. A company plans to launch two mutually exclusive projects and requires rate of return of 12 %. The cost and expected cash flows from both projects are as follow.

YEAR Tesola model X Tesola model Y
0 -50.000 -45.000
1 20.000 42.000
2 15.000 9.000
3 30.000 1.850

a. Calculate NPV of both projects!

b. Calculate IRR of both projects!

c. Based on your answers, on point a and b, which project should be accepted?

d. Suppose that a different new firm evaluates project Tesola model X and requires rate

of return is 15%. should this firm go with the project?

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