Determine which project should be taken based on the npv

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Consider the following cash flows of two mutually exclusive projects for a company. Assume the discount rate for the company is 10 percent.

Year                                       A                            B

0                            -$1,400,000                  -$600,000

1                                  900,000                  300,000

2                                     800,000                 500,000

3                                      700,000               400,000

Question a. Based on the payback period, which project should be taken?

Question b. Based on the NPV, which project should be taken?

Question c. Based on IRR, which project should be taken?

Question d. Based on this analysis, is incremental IRR analysis necessary? If yes, please conduct the analysis

Reference no: EM132487545

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