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Bruin, Incorporated, has identified the following two mutually exclusive projects: Year Cash Flow (A) 0 -$ 54,000 1 30,000 2 24,000 18,000 12,800 3
Bruin, Incorporated, has identified the following two mutually exclusive projects: Year Cash Flow (A) 0 -$ 54,000 1 30,000 2 24,000 18,000 12,800 3 4 Cash Flow (B) -$ 54,000 17,600 21,600 26,000 25,600 a-1. What is the IRR for each of these projects? Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. a-2. If you apply the IRR decision rule, which project should the company accept? b-1. Assume the required return is 14 percent. What is the NPV for each of these projects? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. b-2. Which project will you choose of you apply the NPV decision rule? c-1. Over what range of discount rates would you choose Project A? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. c-2. Over what range of discount rates would you choose Project B? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. d. At what discount rate would you be indifferent between these two projects? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
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