Question3 (6 marks) A hospital has a choice between two mutually exclusive alternatives, each requiring an initial outlay of $25,000. Machine A promises cash flows of $2,000 the first year; $2,000 the second year; and $35,000 the third year. Machine B offers $21,000 the first year; $10,000 the second year; and $2,000 the third year. The required rate of return is 8%. Calculate the NPV and the IRR for each machine. Which of these two mutually exclusive alternatives should be accepted?
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