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    Determining NPV and IRR for given projects

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    Company K is considering two mutually exclusive projects. The cash flows of the projects are as follows:
    Year Project A Project B
    0 -$2,000 -$2,000
    1 $500
    2 $500
    3 $500
    4 $500
    5 $500
    6 $500
    7 $500 $5,650
    a. Compute the NPV and IRR for the above two projects, assuming a 13%
    required rate of return.
    b. Discuss the ranking conflict.
    c. Which of these two projects should be chosen?

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    https://brainmass.com/business/capital-budgeting/determining-npv-and-irr-for-given-projects-210596

    Solution Preview

    Please refer attached file for better clarity of tables and formulas.

    Solution:

    Year Project A Project B PV for Project A PV for Project B
    @13% @13%
    0 -2000 -2000 -2000.00 -2000.00
    1 500 0 442.48 ...

    Solution Summary

    Solution describes the steps needed for choosing one project based upon NPV and IRR criteria.

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