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A company is analyzing two mutually exclusive projects, S and L, with the following cash flow: 0 1 2 3 4 Project S -$1,000 $870
A company is analyzing two mutually exclusive projects, S and L, with the following cash flow:
0 1 2 3 4
Project S -$1,000 $870 $250 $25 $25
Project L -$1,000 $0 $250 $400 $845
The companys WACC is 8.5%. What is the IRR of the better project?(Hint: The better project may or may not be the one with the higher IRR.)
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