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NPV and IRR analysis of projects Thomas Company is considering two mutually exclusive projects. The firm, which has a cost of capital of 11%, has
NPV and IRR analysis of projects Thomas Company is considering two mutually exclusive projects. The firm, which has a cost of capital of 11%, has estimated its cash flows as shown in the following table:
Initial investment $120,000 $109,000 Year Cash inflows 1 $25,000 $55,000 2 $35,000 $45,000 3 $30,000 $30,000 4 $55,000 $15,000 5 $50,000 $25,000
a. Calculate the NPV of each project, and assess its acceptability.
b. Calculate the IRR for each project, and assess its acceptability.
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