IRRMutually exclusive projectsBell Manufacturing is attempting to choose the better of two mutually exclusive projects for expanding the firm's warehouse capacity. The relevant cash flows for the projects are shown in the following table: 4. The firm's cost of capital is 13%.

a.Calculate the IRR for each of the projects. Assess the acceptability of each project on the basis of the IRRs.

b.Which project is preferred?

a.The internal rate of return (IRR) of project X is _________%. (Round to two decimal places.)

Is project X acceptable on the basis of IRR? (Select the best answer below.)

-No

-Yes

The internal rate of return (IRR) of project Y is _________%. (Round to two decimal places.)

Is project Y acceptable on the basis of IRR? (Select the best answer below.)

-Yes

-No

b.Which project is preferred? (Select the best answer below.)

A. Project Y

B. Project X

C. Neither

Project X		Project Y
Initial investment (CF0)	$500,000		$360,000
Year (t)	Cash inflows (CFt)
1	$110,000		$160,000
2	$120,000		$140,000
3	$140,000		$115,000
4	$170,000		$60,000
5	$260,000		$50,000