Question

Mahjong, Inc., has identified the following two mutually exclusive projects:    Year Cash Flow (A) Cash...

Mahjong, Inc., has identified the following two mutually exclusive projects:

  

Year Cash Flow (A) Cash Flow (B)
0 –$37,300        –$37,300       
1 19,660        7,180       
2 15,170        13,680       
3 12,660        20,160       
4 9,660        24,160      

  

Required:
(a) What is the IRR for Project A?
(b) What is the IRR for Project B?
(c) If the required return is 11 percent, what is the NPV for Project A?
(d) If the required return is 11 percent, what is the NPV for Project B?
(e) At what discount rate would the company be indifferent between these two projects?
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