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A company is analyzing two mutually exclusive projects, S and L,with the following cash flows: 01234 project S -1,000 870 250 25 25 project L
A company is analyzing two mutually exclusive projects, S and L,with the following cash flows:
01234
| project S | -1,000 | 870 | 250 | 25 | 25 |
| project L | -1,000 | 0 | 250 | 400 | 845 |
The company's WACC is 8.5%. What is the IRR of thebetter project? (Hint: Note that the betterproject may or may not be the one with the higher IRR.)
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