Your company is choosing between the following non-repeatable, equally risky, mutually exclusive projects with the cash flows shown below. Your cost of capital is 11 percent. How much value will your firm sacrifice if it selects the project with the higher IRR? Please note that Project X is a three year project while project Z is a five year project.

TO RECEIVE CREDIT FOR THIS QUESTION YOU MUST SHOW BOTH YOUR ANSWER, ROUNDED TO TWO DECIMAL PLACES, AND THE CALCULATIONS USED TO ARRIVE AT THAT ANSWER. COMPUTATIONS FOR IRR, NPV AND OTHER TIME VALUE OF MONEY PROBLEMS MUST BE SOLVED WITH YOUR REQUIRED COURSE CALCULATOR. IF REQUESTED YOU MUST BE ABLE TO DEMONSTRATE THAT YOU USED THE REQUIRED COURSE CALCULATOR TO SOLVE THESE TYPE OF PROBLEMS.

Project X Project Z

Year Cash Flow Cash Flow

0 -$1,000 -$3,000

1 550 968.76

2 550 968.76

3 550 968.76

4 N/A 968.76

5 N/A 968.76