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how do I solve this? rule in part (d) consistent with those of the IRR rule? 6.10 As the chief financial officer of the Orient
how do I solve this?
rule in part (d) consistent with those of the IRR rule? 6.10 As the chief financial officer of the Orient Express, you are offered the following two mutu- ally exclusive projects. Cash Flows ($) Year Project A Project B 0 18 I -5,000 3,500 3,500 - 100,000 65,000 65,000 2 a. What are the IRRs of these two projects? b. If you are told only the IRRs of the projects, which would you choose? or c. What did you ignore when you made your decision in part (b)? d. How can the problem be remedied? Perform the appropriate calculation. e. Based on your answer to part (d), which project should you choose? The appropriate dis- count rate is 15 percent. f. According to the NPV rule, which of these two projects should be pursued? Again, assume a 15 percent discount rate. noh flow is $500 and is re
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