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# Discount rate;investment with the cash flow

Question 1

. You are considering two mutually exclusive projects with the following cash flows. Which project(s) should you accept if the discount rate is 7 percent? What if the discount rate is 10 percent?

Year Porject A Project B
0 -275,000 -202,000
1 0 113,600
2 0 81,900
3 360,000 47,000

Question 2
You are considering an investment with the following cash flows. If the required rate of return for this investment is 15.25 percent, should you accept the investment based solely on the internal rate of return rule? Why or why not?

Year Cahsflow
0 -137,900
1 82,400
2 67,300
3 -2,500

#### Solution Preview

See the attached file. Thanks

Question 1

You are considering two mutually exclusive projects with the following cash flows. Which project(s) should you accept if the discount rate is 7 percent? What if the discount rate is 10 percent?

Year   Porject A Project B
0 -275,000.00 -202,000.00
1 0.00 113,600.00
2 0.00 81,900.00
3 360,000.00 47,000.00
Discount Rate 7%
NPV \$18,867.24 ...

#### Solution Summary

This post shows how to calculate discount rate and discusses about the investment with the cash flow

\$2.19