Question
As the director of capital budgeting for Denver Corporation, you are evaluating two mutually exclusive projects with the following net cash flows: Project XProject Z
As the director of capital budgeting for Denver Corporation, you are evaluating two mutually exclusive projects with the following net cash flows:
Project XProject Z
YearCash FlowCash Flow
0-$100,000-$100,000
150,00010,000
240,00030,000
330,00040,000
410,00060,000
If Denver's cost of capital is 15 percent, which project would you choose?
A.Neither project.
B.Project X, since it has the higher IRR.
C.Project Z, since it has the higher NPV.
D.Project X, since it has the higher NPV.
E.Project Z, since it has the higher IRR.
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Intermediate Accounting
Authors: James D. Stice, Earl K. Stice, Fred Skousen
16th Edition
324376375, 0324375743I, 978-0324376371, 9780324375749, 978-0324312140
