Question
Parkallen Inc. has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 $ 33,725 $ 33,725 1 16,145 6,100
Parkallen Inc. has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 $ 33,725 $ 33,725 1 16,145 6,100 2 14,190 11,600 3 11,090 17,000 4 6,990 18,960 a-1. What is the IRR for each of these projects? (Do not round intermediate calculations. Round the final answers to 2 decimal places.) IRR Project A % Project B % a-2. Using the IRR decision rule, which project should the company accept? multiple choice 1 Project A Project B a-3. Is this decision necessarily correct? multiple choice 2 Yes No b-1. If the required return is 11%, what is the NPV for each of these projects? (Do not round intermediate calculations. Round the final answers to 2 decimal places. Omit $ sign in your response.) NPV Project A $ Project B $ b-2. Which project will the company choose if it applies the NPV decision rule? multiple choice 3 Project A Project B c. At what discount rate would the company be indifferent between these two projects? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Discount rate %
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