Explain decision making on the basis of the irr and npv

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Explain decision making on the basis of the IRR and NPV criterion

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

YEAR

A

B

0

-20,000

-20,000

1

10,000

0

2

10,000

0

3

10,000

0

4

10,000

60,000

  1. Compute the internal rate of return for each project.

Compute the net present value for each project if the firm has a 10% cost of capital. Which project should be adopted? Why?

Reference no: EM1313547

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