11.15

11.16

(IRR of an uneven cash flow stream) Microwave Oven Programming, Inc. is considering the construction of a new plant. The plant will have an initial cash outlay of $8.3 million (=$8.3 million), and will produce cash flows of $2.2 million at the end of year 1,$4.1 million at the end of year 2 , and $1.7 million at the end of years 3 through 5 . What is the internal rate of return on this new plant? The IRR of the project is \%. (Round to two decimal places.). The present value of the total costs over a five year period for Project April is $50,000. The present value of total costs over the same 5 year period for Project October is $40,000. The company uses a discount rate of 9%. There are no positive cash flows for these projects, but one or the other is required to comply with government regulations. Which project should be chosen and why? A. April because it has a higher net present value (NPV). B. Both projects because they will add value to the company. C. October because it has a lower net present cost. D. Neither project because the NPVs are negative