Question

IRR and NPV A company is analyzing two mutually exclusive projects, S and L, with the following cash flows: 0 1 2 3 4 Project S -$1,000 $876.05 $260 $15 $5 Project L -$1,000 $10 $260 $380 $771.23 The company's WACC is 9.5%. What is the IRR of the better project? (Hint: The better project may or may not be the one with the higher IRR.) Round your answer to two decimal places.

Answer #1

Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)

S:

Present value of inflows=876.05/1.095+260/1.095^2+15/1.095^3+5/1.095^4

=$1031.79

NPV=Present value of inflows-Present value of outflows

=$1031.79-$1000

=$31.79

L:

Present value of inflows=10/1.095+260/1.095^2+380/1.095^3+771.23/1.095^4

=$1051.85

NPV=Present value of inflows-Present value of outflows

=$1051.85-$1000

=$51.85

Hence L is the better project.

For L:

Let irr be x%

At irr,present value of inflows=present value of outflows.

1000=10/1.0x+260/1.0x^2+380/1.0x^3+771.23/1.0x^4

Hence **x=irr=11.20%(Approx).**

IRR and NPV A company is analyzing two mutually exclusive
projects, S and L, with the following cash flows: 0 1 2 3 4 Project
S -$1,000 $876.05 $260 $15 $5 Project L -$1,000 $10 $260 $380
$771.23 The company's WACC is 9.5%. What is the IRR of the better
project? (Hint: The better project may or may not be the one with
the higher IRR.) Round your answer to two decimal places.

IRR and NPV
A company is analyzing two mutually exclusive projects, S and L,
with the following cash flows:
0
1
2
3
4
Project S
-$1,000
$878.14
$250
$10
$15
Project L
-$1,000
$0
$260
$400
$767.27
The company's WACC is 9.5%. What is the IRR of the better
project? (Hint: The better project may or may not be the
one with the higher IRR.) Round your answer to two decimal
places.
%?

IRR AND NPV
A company is analyzing two mutually exclusive projects, S and L,
with the following cash flows:
0
1
2
3
4
Project S
-$1,000
$896.74
$240
$10
$10
Project L
-$1,000
$0
$260
$380
$840.52
The company's WACC is 10.5%. What is the IRR of the better
project? (Hint: The better project may or may not be the
one with the higher IRR.) Round your answer to two decimal
places.
%

IRR and NPV A company is analyzing two mutually exclusive
projects, S and L, with the following cash flows:
0 1 2 3 4 Project S -$1,000 $868.18 $250 $10 $15
Project L -$1,000 $0 $260 $400 $827.46 The company's WACC is
9.0%.
What is the IRR of the better project? (Hint: The better project
may or may not be the one with the higher IRR.) Round your answer
to two decimal places.

IRR and NPV A company is analyzing two mutually exclusive
projects, S and L, with the following cash flows: 0 1 2 3 4 Project
S -$1,000 $882.94 $240 $15 $10 Project L -$1,000 $5 $240 $380
$793.73 The company's WACC is 10.5%. What is the IRR of the better
project? (Hint: The better project may or may not be the one with
the higher IRR.) Round your answer to two decimal places.

IRR AND NPV
A company is analyzing two mutually exclusive projects, S and L,
with the following cash flows:
0
1
2
3
4
Project S
-$1,000
$865.46
$260
$10
$15
Project L
-$1,000
$10
$250
$400
$765.87
The company's WACC is 10.0%. What is the IRR of the better
project? (Hint: The better project may or may not be the
one with the higher IRR.) Round your answer to two decimal
places.
%

A company is analyzing two mutually exclusive projects, S and L,
with the following cash flows:
0
1
2
3
4
Project S
-$1,000
$864.07
$260
$10
$10
Project L
-$1,000
$5
$260
$380
$778.10
The company's WACC is 9.5%. What is the IRR of the better
project? (Hint: The better project may or may not be the
one with the higher IRR.) Round your answer to two decimal
places.
%

Problem 11-12
IRR and NPV
A company is analyzing two mutually exclusive projects, S and L,
with the following cash flows:
0
1
2
3
4
Project S
-$1,000
$894.25
$250
$5
$10
Project L
-$1,000
$5
$260
$400
$787.74
The company's WACC is 8.0%. What is the IRR of the better
project? (Hint: The better project may or may not be the
one with the higher IRR.) Round your answer to two decimal
places.

A company is analyzing two mutually exclusive projects, S and L,
with the following cash flows:
0
1
2
3
4
Project S
-$1,000
$868.62
$260
$15
$15
Project L
-$1,000
$0
$250
$380
$859.80
The company's WACC is 9.0%. What is the IRR of the
better project? (Hint: The better project may or may not
be the one with the higher IRR.) Round your answer to two decimal
places.
%_______

A company is analyzing two mutually exclusive projects, S and L,
with the following cash flows:
0
1
2
3
4
Project S
-$1,000
$858.80
$260
$15
$15
Project L
-$1,000
$5
$250
$380
$861.23
The company's WACC is 9.0%. What is the IRR of the
better project? (Hint: The better project may or may not
be the one with the higher IRR.) Round your answer to two decimal
places.
%=

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