Question

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You have two mutually exclusive projects to choose from. Proj. A has an initial cost of $45,000 and will produce cash flows of $18,000 for 4 years. There is no termination cash flow.

Proj. B has an initial cost of $30,000 and will produce cash flows of $12,000 for 4 years. There is no termination cash flow.

What is the IRR of each project?

Using a discount rate of 15%, what is the NPV of each project?

Which project, or projects, do you decide to do, if any?

3) If this project has an initial investment of $60,000 and we require a 12% return on our investment, what is the IRR and NPV for this project?