Question: !!!Please show all works and specific explanations for each step!!! ABC Company is considering two independent investments. The projects expected net cash flows are as

!!!Please show all works and specific explanations for each step!!!

ABC Company is considering two independent investments. The projects expected net cash flows are as follows:

Year

Expected Net Cash Flows

Project A

Project B

0

-$1,300

-$405

1

$300

$135

2

$200

$135

3

$100

$135

4

$600

$135

5

$600

$135

6

$850

$135

7

$180

$135

Assume the required rate of return is 10%.

  1. What is each projects IRR? Provide the equation. If you use the IRR method for capital budgeting analysis, which project would you choose? Explain why.
  2. What is each projects NPV? Provide the equation. If you use the NPV method for capital budgeting analysis, which project would you choose? Explain why.
  3. What is each projects Payback period? If you use the Payback period method for capital budgeting analysis, which project would you choose? The target payback period is 4 years. Explain.

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