Why the conflicting ranking

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The Lon-Ki Manufacturing Company must decide between two investments, A and B, which are mutually exclusive. The data on these projects are as follows (in thousands of dollars):

Year

Project

0

1

2

3

4

A

$(100)

$120.00

-

-

-

B

(100)

-

-

-

$193.80

1. For each project, compute:

(a) NPV at 12 percent cost of capital

(b) IRR

2. Why the conflicting ranking? Make a recommendation on which project should be chosen.

 

Reference no: EM13513679

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