Isaac has analyzed two mutually exclusive projects that have 3-year lives. Project a has an npv of $81,406, a payback period of 2. 48 years, and an aar of 9. 31 percent. Project b has an npv of $82,909, a payback period of 2. 57 years, and an aar of 9. 22 percent. The required return for project a is 11. 5 percent while it is 12 percent for project b. Both projects have a required aar of 9. 25 percent. Isaac must make a recommendation and justify it in 15 words or less. What should his recommendation be?.

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27-10-2022
Business

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Isaac has analyzed two mutually exclusive projects that have 3-year lives. Project a has an npv of $81,406, a payback period of 2. 48 years, and an aar of 9. 31 percent. Project b has an npv of $82,909, a payback period of 2. 57 years, and an aar of 9. 22 percent. The required return for project a is 11. 5 percent while it is 12 percent for project b. Both projects have a required aar of 9. 25 percent. Isaac must make a recommendation and justify it in 15 words or less. What should his recommendation be?.

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ahmadfardeen571 ahmadfardeen571 · Answer 1 · 2022-11-10T02:24:43-05:00

Since the projects are mutually exclusive, only one project can be accepted Accept Project B and reject Project A because Project B has higher NPV

Since the payback period and IRR is being met by both, Project with a higher NPV must be selected for higher value addition.

Mutually special tasks are capital tasks that compete without delay with each different.

For instance, if a supervisor has to make a desire strictly between challenge either assignment X or Y, however not each of them simultaneously, then initiatives X and Y are stated to be at the same time specific.

The difference among together extraordinary and impartial events is: a jointly exclusive event can absolutely be described as a scenario when occasions can not arise at an identical time whereas an unbiased occasion takes place whilst one event remains unaffected via the incidence of the opposite event.

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