Question
Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash
Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the table below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is 11%.
| 0 | 1 | 2 | 3 | 4 | ||||||
| Project A | -1,050 | 600 | 360 | 300 | 290 | |||||
| Project B | -1,050 | 200 | 295 | 450 | 740 | |||||
What is Project A's IRR? Do not round intermediate calculations. Round your answer to two decimal places.
What is Project B's IRR? Do not round intermediate calculations. Round your answer to two decimal places.
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Financial Management Theory and Practice
Authors: Eugene F. Brigham, Michael C. Ehrhardt
15th edition
130563229X, 978-1305632301, 1305632303, 978-0357685877, 978-1305886902, 1305886909, 978-1305632295
