What is the irr for each of these projects

Reference no: EM133557763

Bail-up Industries has identified the following two mutually exclusive projects:

Year	Cash flow (A)	Cash flow (B)
0	-$37 500	-$37 500
1	17 300	5 700
2	16 200	12 900
3	13 800	16 300
4	7 600	27 500

(a) What is the IRR for each of these projects? Using the IRR decision rule, which project should the company accept? Is this decision necessarily correct?

(b) If the required return is 11 per cent, what is the NPV for each of these projects? Which project will the company choose if it applies the NPV decision rule?

(c) Over what range of discount rates would the company choose Project A? project B? At what discount rate would the company be indifferent between these two projects? Explain.

Reference no: EM133557763

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