Question
You are considering two independent projects with the following cash flows: Project A Project B Year 1 $ 2,500 $ 4,000 Year 2 3,000 3,500
You are considering two independent projects with the following cash flows:
| Project A | Project B | |
| Year 1 | $ 2,500 | $ 4,000 |
| Year 2 | 3,000 | 3,500 |
| Year 3 | 3,500 | 3,000 |
| Year 4 | 4,000 | 2,500 |
Both Projects A & B have the same initial outlays of £10,000. You expect a return rate of 5% on your investment.
Which project will you chipse to invest based on the IRR rule?
Step by Step Solution
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Step: 1
SOLUTION To compare the two projects using the IRR rule we need to calculate the IRR for each projec...
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Fundamentals of Financial Management
Authors: Eugene F. Brigham, Joel F. Houston
12th edition
978-0324597714, 324597711, 324597703, 978-8131518571, 8131518574, 978-0324597707
