Bruin, Inc., has identified the following two mutually exclusive projects: |
Year | Cash Flow (A) | Cash Flow (B) |
0 | –$37,000 | –$37,000 |
1 | 19,000 | 6,000 |
2 | 14,500 | 12,500 |
3 | 12,000 | 19,000 |
4 | 9,000 | 23,000 |
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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