Solution-Which project has a greater irr based on the

Which project has a greater irr based on the incremental

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Reference no: EM13574464

Consider the following cash flows of two mutually exclusive projects for Chinese Daily News.

Year	New Sunday Early Edition	New Saturday Late Edition
0	-$1,200	-$2,100
1	600	1,000
2	550	900
3	450	800

a. Based on the payback period rule, which project should be chosen?

b. Suppose there is no corporate tax and the cash flows above are income before the depreciation. The firm uses a straight-line depreciation method (i.e., equal amounts of depreciation in each year). What is the average accounting return for each of these two projects?

c. Which project has a greater IRR?

d. Based on the incremental IRR rule, which project should be chosen?

Reference no: EM13574464

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Which project has a greater irr based on the incremental

Reference no: EM13574464

Reference no: EM13574464

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