Consider the following cash flows of two mutually exclusive projects. Year Project A Cash Flow Project B Cash Flow (118,000) (12,000) 1 18,900 1,243 54,728 2,455 3 57,575 2,224 4 73,737 3,543 85,868 7,643 93,992 4,543 The required rate of return for both projects is 12% Blank #1: What is the IRR for A? Blank #2: What is the IRR for B? Blank #3: What is the NPV for A?

Consider the following cash flows of two mutually exclusive projects. Year Project A Cash Flow Project B Cash Flow (118,000) (12,000) 1 18,900 1,243 54,728 2,455 3 57,575 2,224 4 73,737 3,543 85,868 7,643 93,992 4,543 The required rate of return for both projects is 12% Blank #1: What is the IRR for A? Blank #2: What is the IRR for B? Blank #3: What is the NPV for A?

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

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Concept explainers

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.

Question

Consider the following cash flows of two mutually exclusive projects.
Year
Project A Cash Flow
Project B Cash Flow
(118,000)
(12,000)
18,900
1,243
2
54,728
2,455
57,575
2,224
4
73,737
3,543
85,868
7,643
6.
93,992
4,543
The required rate of return for both projects is 12%
Blank #1: What is the IRR for A?
Blank #2: What is the IRR for B?
Blank #3: What is the NPV for A?
Blank #4: What is the NPV for B?
Blank #5: Based on your previous answers, which project will you finally choose?
(Instruction: Type A or B)
Instruction: Round answers to 02 decimal places, include numbers only for blank #1
through #4. Answer in the order of questions asked.

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