Monocle Enterprise: IRR for two mutually exclusive investmen
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Mr. Polly Femus, the president of Monocle Enterprise, is evaluating the following two mutually exclusive investments:
Cash Flows
C0 C1 C2
Project A -$400 $241 $293
Project B - 200 131 172
a) Determine the IRR for each.
b) If Mr. Femus chooses the project with the higher IRR, under what circumstances will his choice be incorrect?
c) At what discount rate would Mr. Femus be indifferent between the two projects?
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The expert shows how to calculate the IRR for mutually exclusive projects for Monocle Enterprise.
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Mr. Polly Femus, the president of Monocle Enterprise, is evaluating the following two mutually exclusive investments:
Year Cash Flow
Project A Project B
0 $(400.00) $(200.00)
1 $241.00 $131.00
2 $293.00 $172.00
a) Determine the IRR for each.
Project A Project ...
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