Question
JKL Industries is evaluating two projects, Project Star and Project Galaxy, each requiring an initial investment of INR 150,000. The projected cash inflows are: Year
JKL Industries is evaluating two projects, Project Star and Project Galaxy, each requiring an initial investment of INR 150,000. The projected cash inflows are:
Year | Cash Flows (Project Star) | Cash Flows (Project Galaxy) |
Initial Investment | (150,000) | (150,000) |
1 | 50,000 | 40,000 |
2 | 40,000 | 50,000 |
3 | 30,000 | 40,000 |
4 | 30,000 | 30,000 |
a. Compute the Internal Rate of Return (IRR) for each project.
b. Which project should be selected if the company’s required rate of return is 7%?
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Financial Reporting and Analysis Using Financial Accounting Information
Authors: Charles H. Gibson
13th edition
1285401603, 1133188796, 9781285401607, 978-1133188797
