Relationship between financial leverage-volatility in eat

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Reference no: EM132042008

1. Compute the IRR, NPV, payback period, discounted payback period for the following two mutually exclusive projects. Assume the required return is 10%.

Year Project A Project B

0 -40 -20

1 70 15

2 10 40

2. What is the relationship between operating leverage and volatility in EBIT? What is the relationship between financial leverage and volatility in EAT?

Reference no: EM132042008

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