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 | $900.69 | $240 | $5 | $10 |
Project L | -$1,000 | $0 | $240 | $420 | $806.73 |
The company's WACC is 8.5%. 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.
Proper solution is provided.
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