Using irr decision rule for mutually exclusive projects

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Suzy is a company located in Dubai. The company manufactures machine parts in Oman. It is currently involved in making a decision concerning the acquisition of new machining tool. Two different versions of the tool are available: Y & Z. The results of NPV and IRR of the two alternatives are summarized below: Tools, Net Present Value (NPV), Internal Rate of Return (IRR) Y AED68.36m, 10.5%, Z AED55.52m, 14.6%. Required: (a) On the basis of NPV and IRR findings above, formulate your investment decision advice., (b) Using NPV decision rule for mutually exclusive projects, indicate which tools the company should accept. (c) Using IRR decision rule for mutually exclusive projects indicate which tools the company should accept. (d) Do you conclusion in (b) and (c) similar? If no, which one is more superior to the other?. (e) State clearly any limitations and assumptions that you made in your calculations.

Reference no: EM131997978

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