Question: Mahjong, Inc., has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 $37,000 $37,000 1 19,370 6,850 2 14,870

Mahjong, Inc., has identified the following two mutually exclusive projects:

Year Cash Flow (A) Cash Flow (B)
0 $37,000 $37,000
1 19,370 6,850
2 14,870 13,350
3 12,370 19,850
4 9,370 23,850

1) What is the IRR for Project A?

2) What is the IRR for Project B?

3) If the required return is 14 percent, what is the NPV for project A?

4) If the required return is 14 percent, what is the NPV for project B?

5) At what discount rate would the company be indifferent between the two projects?

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