Comparing Investment Criteria.Comparing Investment Criteria. NPV and IRR.

Reece Company is presented with the following two mutually exclusive projects. The required return for both

projects is $15$ percent.

$(1)$ What is the IRR for each project?

$(2)$ What is the NPV for each project?

$(3)$ Which, if either, of the projects should the company accept?

Consider the following two mutually exclusive projects:

Whichever project you choose, if any, you require a return of $13$ percent on

your investment.

$(1)$ If you apply the payback criterion, which investment will you choose?

Why?

$(2)$ If you apply the NPV criterion, which investment will you choose? Why?

$(3)$ If you apply the IRR criterion, which investment will you choose? Why?

$(4)$ If you apply the profitability index criterion, which investment will you

choose? Why?

$(5)$ Based on your answers in parts $($a$)$ through $($d$),$ which project will you

finally choose? Why?

Consider the following two mutually exclusive proj

Whichever project you choose, if any, you require a return of $13$ percent on

your investment.

$(1)$ If you apply the payback criterion, which investment will you choose?

Why?

$(2)$ If you apply the NPV criterion, which investment will you choose? Why?

$(3)$ If you apply the IRR criterion, which investment will you choose? Why?

$(4)$ If you apply the profitability index criterion, which investment will you

choose? Why?

$(5)$ Based on your answers in parts $($a$)$ through $($d$),$ which project will you

finally choose? Why?