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Capital Budgeting Models

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A manufacturing firm is considering the mutually exclusive alternatives shown below. Determine which is a better choice at a MARR if 15% based on the IRR criterion.

n Project A1 Project A2
0 $(2,500) $(3,600)
1 $1,600 $2,600
2 $1,840 $2,200

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Solution Summary

The solution chooses the better project by IRR method.

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Please refer attached file for better clarity of tables and formulas.

IRR can be found by using IRR ...

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  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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