Purchase Solution

IRR and mutally exclusive projects

Not what you're looking for?

Ask Custom Question

ABC company is analyzing two mutually exclusive projects, X and Y, whose cash flows are shown below:
Years 0 r = 12% 1yr 2yr 3yr
X -1,100 1,000 350 50
Y -1,100 0 300 1,500
The company's cost of capital is 12 percent, and it can get an unlimited amount of capital at that cost. What is the regular IRR (not MIRR) of the better project, i.e., the project which the company should choose if it wants to maximize its stock price?

Purchase this Solution

Solution Summary

The response describes the steps to calculate the IRR for mutually exclusive projects.

Solution Preview

ABC company is analyzing two mutually exclusive projects, X and Y, whose cash flows are shown below:
Years 0 r = 12% 1yr ...

Purchase this Solution


Free BrainMass Quizzes
Business Processes

This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.

Learning Lean

This quiz will help you understand the basic concepts of Lean.

Income Streams

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

Basics of corporate finance

These questions will test you on your knowledge of finance.

Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.