Question
The management of AlphaTech has two projects under consideration: Year Project O (thousands $) Project P (thousands $) 0 -70 -80 1 30 40 2
The management of AlphaTech has two projects under consideration:
Year | Project O (thousands $) | Project P (thousands $) |
0 | -70 | -80 |
1 | 30 | 40 |
2 | 35 | 45 |
3 | 40 | 50 |
The required rate of return is 13%.
Requirements: a) Calculate the NPV for both projects. b) Determine the IRR for both projects. c) Explain why a project with a higher IRR might not be the best choice. d) Recommend which project should be accepted based on NPV and IRR.
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
