Consider the following cash flows of two mutually exclusive projects for AZ-Motorcars. Assume the discount rate for

Question:

Consider the following cash flows of two mutually exclusive projects for AZ-Motorcars. Assume the for AZ-Motorcars is 10 percent.

a. Based on the payback period, which project should be taken?
b. Based on the NPV, which project should be taken?
c. Based on the IRR, which project should be taken?
d. Based on the above analysis, is incremental IRR analysis necessary? If yes, please conduct
the analysis.

Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...