A company is analyzing two mutually exclusive projects, S and L, with the following cash flows: 1 2 4 Project S -$1,000 $871.53 $260 $10 $10 Project L -$1,000 $0 $260 $400 $766.36 The company's WACC is 10.5%. 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. 11.90

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A: Net present value or NPV is excess of present value of cash inflows over present value of cash…

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Q: None

A: NPV of S = (-1,000/1.105^0) + (877.35/1.105^1) + (260/1.105^2) + (10/1.105^3) + (10/1.105^4) =…

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A: Therefore, the net present value (NPV) is -$1.44.

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A: Calculation of IRR of the better project: Answer: IRR of better project is 11.74%

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Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.