A company is analyzing two mutually exclusive projects, S and L, with the following cash flows: 0 1 2 3 Project S Project L -$1,000 $10 -$1,000 $883.66 $250 $260 $10 $380 $5 $790.73 The company's WACC is 8.0%. What is the IRR of the better project? (Hint: The better project may or may not be the one with the higher IRR.) Round your answer to two decimal places. %

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Question
A company is analyzing two mutually exclusive projects, S and L, with the following cash flows:
0
1
2
3
Project S
Project L -$1,000 $10
-$1,000 $883.66 $250
$260
$10
$380
$5
$790.73
The company's WACC is 8.0%. What is the IRR of the better project? (Hint: The better project may or may not be the one with the higher IRR.) Round your answer to two decimal places.
%
Transcribed Image Text:A company is analyzing two mutually exclusive projects, S and L, with the following cash flows: 0 1 2 3 Project S Project L -$1,000 $10 -$1,000 $883.66 $250 $260 $10 $380 $5 $790.73 The company's WACC is 8.0%. What is the IRR of the better project? (Hint: The better project may or may not be the one with the higher IRR.) Round your answer to two decimal places. %
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