What is the IRR for each of these projects? ( Do not round intermediate calculat

Question

What is the IRR for each of these projects? (Do not round intermediate calculations. Enter your answer as a percentage roundedto 2 decimal places (e.g., 32.16).)

Assume the required return is 10 percent. What is the NPV for each of these projects? (Do not round intermediate calculations.Round your answers to 2 decimal places (e.g., 32.16).)

Over what range of discount rates would you choose Project A? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Over what range of discount rates would you choose Project B? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

At what discount rate would you be indifferent between these two projects? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

Explanation / Answer

Requirement 1:

Ans a: IRR for Project A: 21.80%

Project B: 20.32%

Ans b: Based on IRR decision rule Project A (21.80%) with higher IRR is selected.

Requrement 2:

Ans a: NPV of Project A: $10,572.99

NPV of Project b: $ 11,941.43

Ans b: Project B (NPV of $ 11,941,43) will be choosen

Requirement 3:

Ans a: Under NPV criteria Project A will be choosen if the discount rate is lower than 21.80%

Ans b: Under NPV criteria Project B will be choosen if the discount rate is lower than 20.32%

Ans c: 14.99% is the discount rate for indifference between the two projects

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