Question: Refer to Exercise E25-25. Compute the internal rate of return of each project, and use this information to identify the better investment. Exercise E25-25 Use

Refer to Exercise E25-25. Compute the internal rate of return of each project, and use this information to identify the better investment.

Exercise E25-25

Use the net present value method to determine whether Stuebs Products should invest in the following projects:

- Project A: Costs $\$ 275,000$ and offers eight annual net cash inflows of $\$ 55,000$. Stuebs Products requires an annual return of $14 \%$ on projects like A.

- Project B: Costs $\$ 380,000$ and offers nine annual net cash inflows of $\$ 72,000$. Stuebs Products demands an annual return of $12 \%$ on investments of this nature.

What is the net present value of each project? What is the maximum acceptable price to pay for each project?

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