Question
Consider the following two mutually exclusive projects: Cash Flows ($) Project C 0 C 1 C 2 C 3 A -$100 +$60 +$60 +$60 B
Consider the following two mutually exclusive projects:
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| Project | C0 | C1 | C2 | C3 |
| A | -$100 | +$60 | +$60 | +$60 |
| B | -$100 | ---- | ---- | +$208.35 |
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Calculate the NPV of each project for a discount rate of 14%.
What is approximately the IRR for each project individually?
Use the IRR cross-over method to determine which of the projects you should accept (describe the correct decision rule describing when you pick A versus B based on what discount rate).
(DO NOT USE EXCEL)
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Business Analysis And Valuation Using Financial Statements Text And Cases
Authors: Krishna G. Palepu, Paul M. Healy, Victor L Bernard
3rd Edition
0324118945, 9780324118940
