Share
Explore BrainMass

Evaluation of Project by IRR

You are evaluating two mutually exclusive capital budgeting projects that have the following characteristics:

CASH FLOWS
YEAR PROJECT A PROJECT B
0 ($4,000) ($4,000)
1 0 3,500
2 $5,000 1,100

IRR 11.8% 12.0%

If your required rate of return (k) is 10percent, which project should you choose, explain your answer?
A. Both
B. Neither
C. Project A
D. Project B
E. None of the above

Solution Preview

THESE ARE TWO MUTUALLY EXCLUSIVE PROJECT. IT MEANS THAT WE CAN CHOSE ONLY ONE OUT OF THESE TWO PROJECTS, THOUGH ...

Solution Summary

This explains the evaluation of projects by IRR

$2.19