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Evaluate the following mutually exclusive projects using IRR as a selection criterion.Assuming the discount rate to be 14 percent, which project-if either-would be selected? Project A costs $50,000 and returns $15,000 after-tax annually.Project B costs $35,000 and returns $11,000 after-tax annually.Both projects last five years.
Annuity Growth Rate
The rate at which the value of an annuity investment increases over time.
Compounded Annually
A method of calculating interest in which the interest earned each year is added to the principal, so that the balance doesn't merely grow, it grows at an increasing rate.
Growing Annuity
A series of cash flows that grow at a constant rate for a specific number of periods.
Cash Flow Growth Rate
The rate at which a company's cash flow increases over a specified period.
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