Discuss the size-disparity problem

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Reference no: EM131488619

Question: (Size-disparity problem) The D. Dorner Farms Corporation is considering purchasing one of two fertilizer-herbicides for the upcoming year. The more expensive of the two is better and will produce a higher yield. Assume these projects are mutually exclusive and that the required rate of return is 10 percent. Given the following free cash flows:

a. Calculate the NPV of each project.

b. Calculate the PI of each project.

c. Calculate the IRR of each project.

d. If there is no capital-rationing constraint, which project should be selected? If there is a capital-rationing constraint, how should the decision be made?

Reference no: EM131488619

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