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Question 7 Consider the following cash flows on two independent projects for ABC Corporation. Both projects require an annual return of 9 percent. If ABC
Question 7 Consider the following cash flows on two independent projects for ABC Corporation. Both projects require an annual return of 9 percent. If ABC Corporation applies the IRR decision rule, which project should it choose? Why or why not? Year Project A Project B 0 -$42,000 $52,000 1 $15,300 $15,000 2. $18,400 $38,400 3 3 $17,500 $5,500 Project A; The IRR exceeds the required return by about 1.35 percent. None; Both IRR are less the required return. Both; Both IRR exceed the required return. Project B; The IRR exceeds the required return by about 1.95 percent. Project A; The IRR is less than the required return by about 1.35 percent
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