Bruin, Inc., has identified the following two mutually exclusive projects: |
Year | Cash Flow (A) | Cash Flow (B) |
0 | –$36,500 | –$36,500 |
1 | 18,820 | 6,400 |
2 | 14,320 | 12,900 |
3 | 11,820 | 19,400 |
4 | 8,820 | 23,400 |
a. What is the IRR for Project A? |
b. What is the IRR for Project B? |
c. If the required return is 13 percent, what is the NPV for Project A? |
d. If the required return is 13 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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