Question
QUESTION 20 For this and the next 3 questions. Consider the following MUTUALLY EXCLUSIVE projects. Cost of capital is 10%. Calculate IRR. Year Project A
QUESTION 20
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For this and the next 3 questions. Consider the following MUTUALLY EXCLUSIVE projects. Cost of capital is 10%. Calculate IRR.
Year
Project A
Project B
0
-40,000
-20,000
1
8,000
7,000
2
14,000
13,000
3
13,000
12,000
4
12,000
5
11,000
6
10,000
IRR (A) = 17.47%. IRR(B) = 25.20%
IRR (A) = 17.77%. IRR(B) = 25.20%
IRR (A) = 17.47%. IRR(B) = 20%
None of the above is completely correct
1 points
QUESTION 21
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Calculate NPV
NPV(A) = 2,131.01. NPV(B) = 2,462.24
NPV(A) = 9,281.10. NPV(B) = 6,057.45
NPV(A) = 9,281.10. NPV(B) = 6,123.22
None of the above is completely correct
1 points
QUESTION 22
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Calculate the equivalent annual annuity (EAA).
EAA (A) = 2,131.01. EAA (B) = 2,462.24
EAA(A) = 9,281.10. EAA (B) = 6,057.45
EAA(A) = 9,281.10. EAA (B) = 6,123.22
None of the above is completely correct
1 points
QUESTION 23
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Which project should be chosen and why?
Project A; it has a higher EAA
Project B; it has a higher EAA
Both projects are equally acceptable
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