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18- Mahjong, Inc., has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 $36,800 $36,800 1 19,150 6,670 2
18-
Mahjong, Inc., has identified the following two mutually exclusive projects: |
Year | Cash Flow (A) | Cash Flow (B) |
0 | $36,800 | $36,800 |
1 | 19,150 | 6,670 |
2 | 14,650 | 13,170 |
3 | 12,150 | 19,670 |
4 | 9,150 | 23,670 |
Required: |
(a) | What is the IRR for Project A? |
21.9% 20.2% 22.32% 20.62% 21.26% |
(b) | What is the IRR for Project B? |
21.44% 20.82% 21.86% 20.2% 19.78% |
(c) | If the required return is 16 percent, what is the NPV for Project A? |
$3,536.41 $3,605.08 $3,433.41 $3,330.41 $3,261.74 |
(d) | If the required return is 16 percent, what is the NPV for Project B? |
$4,632.52 $4,279.56 $4,191.32 $4,411.92 $4,544.28 |
(e) | At what discount rate would the company be indifferent between these two projects? |
18.71% 19.1% 20.67% 20.28% 19.69% |
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