What is the IRR for each of these projects

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Reference no: EM132149051

Problem - NPV versus IRR

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

Year	Cash Flow (A)	Cash Flow (B)
0	-$29,700	-$29,700
1	15,100	4,650
2	13,000	10,150
3	9,550	15,900
4	5,450	17,500

a-1. What is the IRR for each of these projects?

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

a-3. Is this decision necessarily correct?

b-1. If the required return is 12 percent, what is the NPV for each of these projects?

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

c. At what discount rate would the company be indifferent between these two projects?

Reference no: EM132149051

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