Question
Use the following information to answer the next three questions. Consider the cash flows from two mutually exclusive projects: Cash Flow Year Project A Project
Use the following information to answer the next three questions.
Consider the cash flows from two mutually exclusive projects:
| Cash Flow | ||
| Year | Project A | Project B |
| 0 | -$420,000 | -$420,000 |
| 1 | $140,000 | $400,000 |
| 2 | $230,000 | $110,000 |
| 3 | $331,000 | $140,000 |
The appropriate discount rate is 8.5%.
1, Calculate the net present value (NPV) for both projects, and determine which project should be accepted based on NPV. Round both NPVs to the nearest dollar.
2, Calculate the internal rate of return (IRR) for both projects, and determine which project should be accepted based on IRR.
3, Calculate the net present value (NPV) for both projects using the crossover rate as your discount rate. Round both NPVs to the nearest dollar.
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International Financial Reporting Standards This Work Professes To Assist Finance Professionals And Students To Deep Dive Into International With Illustration And Solved Problems
Authors: B D Chatterjee
1st Edition
150108612X, 9781501086120
