Question
A firm has two $1,000, mutually exclusive investment alternatives with the following cash inflows. The cost of capital is 6 percent. Year__________________Cash Inflow _______________A________________________B 1______________$175_____________________$1,100
A firm has two $1,000, mutually exclusive investment alternatives with the following cash inflows. The cost of capital is 6 percent. Year__________________Cash Inflow _______________A________________________B 1______________$175_____________________$1,100 2______________175______________________0 3______________175______________________0 4______________175______________________0 5______________175______________________0 6______________175______________________0 7______________175______________________0 8______________175______________________0 What is the internal rate of return on each investment?
| IRR for investment A is 8.15 and IRR for investment B is 10% | ||
| IRR for investment A is 9.15 and IRR for investment B is 11% | ||
| IRR for investment A is 10.15 and IRR for investment B is 12% | ||
| IRR for investment A is 11.15 and IRR for investment B is 13% |
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Personal Finance Terms Financial Education Is Your Best Investment
Authors: Thomas Herold
1st Edition
1090822871, 978-1090822871
