Question: Question 8 Given the cash flows for Project I and Project J: Year Project I Project J 0 -65000 -85000 1 18000 20000 2 22000

Question 8

Given the cash flows for Project I and Project J:

Year

Project I

Project J

0

-65000

-85000

1

18000

20000

2

22000

24000

3

25000

28000

4

30000

32000

5

35000

36000

6

40000

40000

Requirements:

  1. Calculate the NPV for both projects assuming a required rate of return of 11%.
  2. Determine the IRR for each project.
  3. Calculate the traditional payback period for both projects.
  4. Discuss which project(s) should be selected if they are independent.
  5. Discuss which project should be selected if they are mutually exclusive.

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