Question
Romboski, LLC, has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 ?$ 64,000 ?$ 64,000 1 40,000 26,600
Romboski, LLC, has identified the following two mutually exclusive projects: |
Year | Cash Flow (A) | Cash Flow (B) | ||||||
0 | ?$ | 64,000 | ?$ | 64,000 | ||||
1 | 40,000 | 26,600 | ||||||
2 | 34,000 | 30,600 | ||||||
3 | 23,000 | 36,000 | ||||||
4 | 14,800 | 24,600 | ||||||
Requirement 1: | |
(a) | What is the IRR for each of these projects? (Do not round intermediate calculations. Enter your answer as a percentage roundedto 2 decimal places (e.g., 32.16).) |
Internal rate of return | |
Project A | % |
Project B | % |
(b) | If you apply the IRR decision rule, which project should the company accept? |
(Click to select)Project BProject A |
Requirement 2: | |
(a) | Assume the required return is 15 percent. What is the NPV for each of these projects? (Do not round intermediate calculations.Round your answers to 2 decimal places (e.g., 32.16).) |
Net present value | |||||||||||||||||||
Project A | $ | ||||||||||||||||||
Project B | $ | ||||||||||||||||||
|
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