Computation of internal rate of return and npv

Reference no: EM1313510

Computation of internal rate of return and NPV

Two mutually exclusive investment projects have the following forecasted cash flows:

Year 0: (A) $-20,000 (B) $-20,000
Year 1: (A) $10,000 (B) 0
Year 2: (A) $10,000 (B) 0
Year 3: (A) $10,000 (B) 0
Year 4: (A) $10,000 (B) $60,000

a. Compute the internal rate of return for each project

b. Compute the net present value for each project if the firm has a 10% cost of capital

c. Which project should be adopted? Why?

Reference no: EM1313510

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