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5. As the chief financial officer of the Orient Express, you are offered the following two mutually exclusive projects Cashflow Year Project A Project B
5. As the chief financial officer of the Orient Express, you are offered the following two mutually exclusive projects Cashflow Year Project A Project B 0 -5,000 -100,000 3,500 65,000 2- 3,500 - 65,000 a What are the IRRs of these two projects? b. If you are told only the IRRs of the projects, which would you choose? C. What did you ignore when you made your decision in (6)? d. How can the problem be remedied? Perform the appropriate calculation e Based on you answer to part (d), which project should you choose? The appropriate discount rate is 15 percent According to the NPV rule, which of these two projects should be pursued? Again, assume a 15 percent discount rate
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