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Garage, Inc., has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 -28,100 -28,100 1 13,500 3,850 2 11,400
Garage, Inc., has identified the following two mutually exclusive projects: |
Year | Cash Flow (A) | Cash Flow (B) | |||||
0 | -28,100 | -28,100 | |||||
1 | 13,500 | 3,850 | |||||
2 | 11,400 | 9,350 | |||||
3 | 8,750 | 14,300 | |||||
4 | 4,650 | 15,900 |
Project A IRR: 16.39%
Project B IRR: 16.16%
When the Required Return is 12%, what is the NPV for both projects? PROJECT A: 2,224.82 PROJECT B: 3,074.46
**At what discount rate would the company be indifferent between these two projects?
The question with the asterics is the one I am having trouble with.
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