Calculate the IRR of Two Projects
Not what you're looking for?
Two projects being considered by a firm are mutually exclusive and have the following projected cash flows:
Project A Project B
Year Cash Flow Cash Flow
0 ($100,000) ($100,000)
1 39,500 0
2 39,500 0
3 39,500 133,000
Based only on the information given, which of the two projects would be preferred, and why?
a. Project A, because it has a shorter payback period.
b. Project B, because it has a higher IRR.
c. Indifferent, because the projects have equal IRRs.
d. Include both in the capital budget, since the sum of the cash
inflows exceeds the initial investment in both cases.
e. Choose neither, since their NPVs are negative.
Purchase this Solution
Solution Summary
The solution provides a detailed and step-by-step explanation for the problem in an attached Excel file.
Solution Preview
We choose Project B, because it has a higher IRR. This is ...
Purchase this Solution
Free BrainMass Quizzes
IPOs
This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)
Organizational Leadership Quiz
This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.
SWOT
This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.
Balance Sheet
The Fundamental Classified Balance Sheet. What to know to make it easy.
MS Word 2010-Tricky Features
These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.