Purchase Solution

Evaluation of Project by IRR

Not what you're looking for?

Ask Custom Question

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

Purchase this Solution
Solution Summary

This explains the evaluation of projects by IRR

Solution Preview

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

Purchase this Solution
Free BrainMass Quizzes
Team Development Strategies

This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.

Basics of corporate finance

These questions will test you on your knowledge of finance.

Income Streams

In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.

Paradigms and Frameworks of Management Research

This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.

Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.

View More Free Quizzes
Related BrainMass Solutions

  • Capital Budgeting - Payback, NPV, PI, IRR

    105592 Project evaluation processes- Payback, NPV, PI, IRR Can someone please describe the following project evaluation processes for me: Payback, NPV, PI, IRR. Is any one evaluation process better the others? Why?

  • Capital Budgeting-NPV and IRR

    19135 Project evaluation-investments, cash flow, NPV, and IRR: Revenues generated by a new fad product are forecast as follows:c. If the opportunity cost of capital is 12%, what is the project NPV?d. What is the project IRR? Project Evaluation.

  • Final Project IRR v. MIRR Valuation Methods

    Restatement of Thesis The research paper explains that MIRR method of evaluation is better than the IRR method of evaluation.

  • Project evaluation

    If the opportunity cost of capital is 12 percent, what is project NPV? 4. What is project IRR? Please see the attached files. The solution explains the calculation of cash flows for a project and the evaluation of the project using NPV and IRR

  • Project evaluation

    Internal Rate of Return (IRR) - This measures the return generated by the cash flows of the project based on the initial investment made.

  • Salt at Pear Computer Services: NPV, IRR and Project Evaluation

    This solution shows step-by-step calculations in an Excel file to determine the NPV, IRR and provide an evaluation of the project and whether if Salt should accept the proposal.

  • Project evaluation

    Is the IRR the same as MIRR? Why or why not? Please see the attachment The solution explains project evaluation using IRR and NPV.

  • Time Value of Money

    164268 Project Evaluation Process and Time Value of Money Describe the following project evaluation processes: Payback, NPV, PI, IRR. Is any one evaluation process better the others? Why? 2.

  • Economic Value Added and NPV and IRR

    627845 Economic Value Added and NPV and IRR Explain Economic Value Added and compare it with NPV and IRR methods of capital budgeting in terms of capital budgeting project evaluation methods.

View More Related Solutions