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A B -10,000 3. 1,000 2103.08 O It is your first week at your new job. You have been asked to evaluate a choice between

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A B -10,000 3. 1,000 2103.08 O It is your first week at your new job. You have been asked to evaluate a choice between two mutually exclusive projects, A and B. NPV18% IRR 10,000 16.04% 910.43 1,000 -10,000 1,000 15.72% 1,000 13,000 C 7,000 12,000 1-1,1924 is. 47 You remember that Steve Cox, your brilliant instructor from F542 always said that NPV is the preferred method to evaluate projects. Unfortunately, your boss, Mr. Beastly, is an active member of the NIA (National IRR Association) a group which supports the rights of all Americans to use the Internal Rate of Return method. You want to recommend project B but you know Mr. Beastly will prefer A which seems to be favored using the IRR. Show (above) and explain (below) to Mr. Beastly that project B is better, even when the IRR method is used. (5 points) Because of the IRR in then the rate of returned prefan B while the is the differ between and Es Graph the NPV profile for projects A and B. Make sure you label the axes and all of the important points including the crossover. (3 points) A B -10,000 3. 1,000 2103.08 O It is your first week at your new job. You have been asked to evaluate a choice between two mutually exclusive projects, A and B. NPV18% IRR 10,000 16.04% 910.43 1,000 -10,000 1,000 15.72% 1,000 13,000 C 7,000 12,000 1-1,1924 is. 47 You remember that Steve Cox, your brilliant instructor from F542 always said that NPV is the preferred method to evaluate projects. Unfortunately, your boss, Mr. Beastly, is an active member of the NIA (National IRR Association) a group which supports the rights of all Americans to use the Internal Rate of Return method. You want to recommend project B but you know Mr. Beastly will prefer A which seems to be favored using the IRR. Show (above) and explain (below) to Mr. Beastly that project B is better, even when the IRR method is used. (5 points) Because of the IRR in then the rate of returned prefan B while the is the differ between and Es Graph the NPV profile for projects A and B. Make sure you label the axes and all of the important points including the crossover. (3 points)

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