Question
Bruin, Incorporated, has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 $ 30,000 $ 30,000 1 15,400 4,800
Bruin, Incorporated, has identified the following two mutually exclusive projects: |
Year | Cash Flow (A) | Cash Flow (B) |
---|---|---|
0 | $ 30,000 | $ 30,000 |
1 | 15,400 | 4,800 |
2 | 13,300 | 10,300 |
3 | 9,700 | 16,200 |
4 | 5,600 | 17,800 |
a-1. | What is the IRR for each of these projects? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) |
a-2. | Using the IRR decision rule, which project should the company accept? |
multiple choice 1 Project A Project B |
a-3. | Is this decision necessarily correct? |
multiple choice 2 Yes No |
b-1. | If the required return is 12 percent, what is the NPV for each of these projects? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) |
b-2. | Which project will the company choose if it applies the NPV decision rule? |
multiple choice 3 Project A Project B |
c. | At what discount rate would the company be indifferent between these two projects? (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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