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Your company has a required rate of return equal to 10%. If the following projects are mutually exclusive, and you only have the information that
Your company has a required rate of return equal to 10%. If the following projects are mutually exclusive, and you only have the information that is provided, which should you accept?
| A | B | C | E | |
| Payback (years) | 1 | 5 | 2 | 5 |
| IRR | 18% | 20% | 20% | 12% |
| NPV (Millions) | $40 | $75 | $35 | $100 |
All since all have positive NPV | ||
All since all have NPV positive and IRR higher than cost of capital | ||
C | ||
B and C | ||
E |
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Quantitative Analysis for Management
Authors: Barry Render, Ralph M. Stair, Michael E. Hanna, Trevor S. Ha
12th edition
133507335, 978-0133507331
