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Your division is considering two investment projects, each of which requires an up-front expenditure of $22...

Your division is considering two investment projects, each of which requires an up-front expenditure of $22 million. You estimate that the cost of capital is 11% and that the investments will produce the following after-tax cash flows (in millions of dollars):

Year Project A Project B
1 5 20
2 10 10
3 15 8
4 20 6
  1. If the two projects are mutually exclusive and the cost of capital is 15%, which project should the firm undertake?

    The firm should undertake -Select-

  2. What is the crossover rate? Round your answer to two decimal places.

      %

  3. If the cost of capital is 11%, what is the modified IRR (MIRR) of each project? Do not round intermediate calculations. Round your answers to two decimal places.

    Project A:   %

    Project B:   %

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