Management of Oriole Measures, Inc., is evaluating two independent projects. The company uses a 13.5 percent discount rate for such projects. The costs and cash flows for the projects are shown in the following table. Year 0 1 2 3 4 5 6 7 Project 1 -$9,225,375 3,207,790 1,605,890 1,436,800 1,283,000 1,316,780 1,571,540 1,451,690 Project 2 - $11,682,332 The IRR of Project 1 is 2,104,730 3,879,690 3,071,080 3,878,100 4,761,080 a. What are the IRRs for the projects? (Round answers to 3 decimal places, e.g. 15.257%.) %, and the IRR of Project 2 is b. Does the IRR criterion indicate a different decision than the NPV criterion? %.
Management of Oriole Measures, Inc., is evaluating two independent projects. The company uses a 13.5 percent discount rate for such projects. The costs and cash flows for the projects are shown in the following table. Year 0 1 2 3 4 5 6 7 Project 1 -$9,225,375 3,207,790 1,605,890 1,436,800 1,283,000 1,316,780 1,571,540 1,451,690 Project 2 - $11,682,332 The IRR of Project 1 is 2,104,730 3,879,690 3,071,080 3,878,100 4,761,080 a. What are the IRRs for the projects? (Round answers to 3 decimal places, e.g. 15.257%.) %, and the IRR of Project 2 is b. Does the IRR criterion indicate a different decision than the NPV criterion? %.
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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Transcribed Image Text:Management of Oriole Measures, Inc., is evaluating two independent projects. The company uses a 13.5
percent discount rate for such projects. The costs and cash flows for the projects are shown in the following
table.
Year
0
1
2
3
4
st
5
6
7
Project 1
- $9,225,375
3,207,790
1,605,890
1,436,800
1,283,000
1,316,780
1,571,540
1,451,690
Project 2
- $11,682,332
The IRR of Project 1 is
2,104,730
3,879,690
3,071,080
3,878,100
4,761,080
a. What are the IRRs for the projects? (Round answers to 3 decimal places, e.g. 15.257%.)
%, and the IRR of Project 2 is
b. Does the IRR criterion indicate a different decision than the NPV criterion?
%.
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