How much value will be forgone

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Reference no: EM131012322

Poston Inc. is considering Projects S and L whose cash flows are shown below. These projects are mutually exclusive (must choose one or the other) equally risky, and not repeatable. If the decision is made by choosing the project with the higher IRR, how much value will be forgone? You must calculate the IRR and NPV for both projects select the project with the higher ITT and then calculate how much less the NPV is by selecting the project with the highr IRR.

WACC: 10.25%

year 0 1 2 3 4

CFs -$2050 $750 $760 $770 $780

CF L -$4300 $$1500 $1518 $1536 $1554

Reference no: EM131012322

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