Reference no: EM132492559

Bruin, Inc., has identified the following two mutually exclusive projects:

Year       Cash Flow       Cash Flow

                (A)                  (B)

0          -$28,700          -$28,700

1          14,100              4,150

2           12,000               9,650

3         9,050               14,900

4             4,950            16,500

Question a-1 What is the IRR for each of these projects? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

Question a-2 Using the IRR decision rule, which project should the company accept?

Question a-3 Is this decision necessarily correct? Yes

Question b-1 If the required return is 12 percent, what is the NPV for each of these projects? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

Question b-2 Which project will the company choose if it applies the NPV decision rule? Project A

Question c. At what discount rate would the company be indifferent between these two projects? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)