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Item6 1points Return to question Item 6 Problem 8-10 NPV versus IRR [LO 3, 4] Piercy, LLC, has identified the following two mutually exclusive projects:
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Item 6
Problem 8-10 NPV versus IRR [LO 3, 4]
Piercy, LLC, has identified the following two mutually exclusive projects: |
Year | Cash Flow (A) | Cash Flow (B) | ||||||
0 | $ | 51,000 | $ | 51,000 | ||||
1 | 27,000 | 14,900 | ||||||
2 | 21,000 | 18,900 | ||||||
3 | 16,500 | 23,000 | ||||||
4 | 12,200 | 25,900 | ||||||
a-1. | What is the IRR for each of these projects? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) |
a-2. | If you apply the IRR decision rule, which project should the company accept? |
b-1. | Assume the required return is 10 percent. What is the NPV for each of these projects? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) |
b-2. | Which project will you choose of you apply the NPV decision rule? |
c-1. | Over what range of discount rates would you choose Project A? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
c-2. | Over what range of discount rates would you choose Project B? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
d. | At what discount rate would you be indifferent between these two projects? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
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