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28 Sep 2019
Garage, Inc., has identified the following two mutually exclusive projects:
Year Cash Flow (A) Cash Flow (B) 0 â$ 28,900 â$ 28,900 1 14,300 4,250 2 12,200 9,750 3 9,150 15,100 4 5,050 16,700
a-1 What is the IRR for each of these projects? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
IRR Project A % Project B %
a-2 Using the IRR decision rule, which project should the company accept?
Project A Project B
a-3 Is this decision necessarily correct? Yes No
b-1 If the required return is 10 percent, what is the NPV for each of these projects? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
NPV Project A $ Project B $
b-2 Which project will the company choose if it applies the NPV decision rule? Project A Project B
c. At what discount rate would the company be indifferent between these two projects? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Discount rate ? %
Garage, Inc., has identified the following two mutually exclusive projects: |
Year | Cash Flow (A) | Cash Flow (B) | |||||
0 | â$ | 28,900 | â$ | 28,900 | |||
1 | 14,300 | 4,250 | |||||
2 | 12,200 | 9,750 | |||||
3 | 9,150 | 15,100 | |||||
4 | 5,050 | 16,700 | |||||
a-1 | What is the IRR for each of these projects? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) |
IRR | ||
Project A | % | |
Project B | % | |
a-2 | Using the IRR decision rule, which project should the company accept? | ||||
|
a-3 | Is this decision necessarily correct? | ||||
|
b-1 | If the required return is 10 percent, what is the NPV for each of these projects? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) |
NPV | ||
Project A | $ | |
Project B | $ | |
b-2 | Which project will the company choose if it applies the NPV decision rule? | ||||
|
c. | At what discount rate would the company be indifferent between these two projects? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
Discount rate ? | % |
dcht24111997Lv10
16 Apr 2023
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Irving HeathcoteLv2
28 Sep 2019
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