Question

You've estimated the following cash flows (in $) for two mutually exclusive projects: Year Project A...

You've estimated the following cash flows (in $) for two mutually exclusive projects:

Year Project A Project B
0 -5,600 -8,400
1 1,325 1,325
2 2,148 2,148
3 4,193 8,192

The required return for both projects is 8%.

Part 1 : What is the IRR for project A? 3+ Decimals

Part 2 What is the IRR for project B? 3+ Decimals

Part 3 Which project seems better according to the IRR method? Project A or Project B

Part 4 What is the NPV for project A?

Part 5 What is the NPV for project B?

Which project seems better according to the NPV method? Project A or Project B

Compare the answers to parts 3 and 6. If both projects are mutually exclusive, which one should you accept? Project A or Project B

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