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

Question

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

Using the IRR decision rule, which project should the company accept?

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

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

Explanation / Answer

Year Cash Flow (A) Cash Flow (B) 0 $ -29,500 $ -29,500 1 $   14,900 $     4,550 2 $   12,800 $   10,050 3 $     9,450 $   15,700 4 $     5,350 $   17,300 a-1 19.69% 18.07% IRR(B2:B6) IRR(C2:C6) a-2 Project A a-3 No, other rules to consider Year Cash Flow (A) Cash Flow (B) 0 $ -29,500 $ -29,500 1 $   14,900 $     4,550 2 $   12,800 $   10,050 3 $     9,450 $   15,700 4 $     5,350 $   17,300 b-1 $   5,378.01 $   6,553.92 B13+NPV(10%,B14:B17) C13+NPV(10%,C14:C17) b-2 Project B $   2,734.68 $   2,735.23 To find the rate of ndifference we subtract CF of project B from Project A and determine IRR Year Cash Flow (A) Cash Flow (B) A-B 0 $ -29,500 $ -29,500 $            -   1 $   14,900 $     4,550 $   10,350 2 $   12,800 $   10,050 $     2,750 3 $     9,450 $   15,700 $    -6,250 4 $     5,350 $   17,300 $ -11,950 14.41% C rate of indifference is 14.41%

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