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    What is the IRR: project S or L

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    A company is analyzing two mutually exclusive projects, S and L, with the following cash flows:

    0 1 2 3 4
    Project S -$1,000 $900 $250 $10 $10

    Project L -$1,000 $0 $250 $$400 $800

    The company's WACC is 10 percent. What is the IRR of the better project? (Hint: Note that the better project may or may not be the one with the higher IRR.)

    © BrainMass Inc. brainmass.com June 3, 2020, 9:46 pm ad1c9bdddf
    https://brainmass.com/business/capital-budgeting/what-is-the-irr-project-s-or-l-198325

    Solution Preview

    Please see the attached file.

    1)
    WACC 10%
    IRR 13%
    Year 0 1 2 3 4
    Cash Flows $(1,000.00) $900.00 $250.00 $10.00 $10.00 ...

    $2.19

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