Problem 8-10 NPV versus IRR [LO 3, 4] Bruin, Incorporated has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 -$ 41,300 -$ 41,300 1 19,100 6,300 2 17,800 14,200 3 15,200 17,900 4 8,400 30,300 a-1. What is the IRR for each of these projects? Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. a-2. If you apply the IRR decision rule, which project should the company accept? b-1. Assume the required return is 11 percent. What is the NPV for each of these projects? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. b-2. Which project will you choose if you apply the NPV decision rule? a-1. Project A Project B a-2. Project acceptance b-1. Project A Project B b-2. Project acceptance 19.78 % 18.92% Project A $ 7,001.54 $ 8,948.59 Project B
Problem 8-10 NPV versus IRR [LO 3, 4] Bruin, Incorporated has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 -$ 41,300 -$ 41,300 1 19,100 6,300 2 17,800 14,200 3 15,200 17,900 4 8,400 30,300 a-1. What is the IRR for each of these projects? Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. a-2. If you apply the IRR decision rule, which project should the company accept? b-1. Assume the required return is 11 percent. What is the NPV for each of these projects? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. b-2. Which project will you choose if you apply the NPV decision rule? a-1. Project A Project B a-2. Project acceptance b-1. Project A Project B b-2. Project acceptance 19.78 % 18.92% Project A $ 7,001.54 $ 8,948.59 Project B
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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![Problem 8-10 NPV versus IRR [LO 3, 4]
Bruin, Incorporated has identified the following two mutually exclusive projects:
Year
Cash Flow (A)
Cash Flow (B)
0
-$ 41,300
-$ 41,300
1
19,100
6,300
2
17,800
14,200
3
15,200
17,900
4
8,400
30,300
a-1. What is the IRR for each of these projects?
Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.
a-2. If you apply the IRR decision rule, which project should the company accept?
b-1. Assume the required return is 11 percent. What is the NPV for each of these projects?
Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.
b-2. Which project will you choose if you apply the NPV decision rule?
a-1. Project A
Project B
a-2. Project acceptance
b-1. Project A
Project B
b-2. Project acceptance
19.78 %
18.92%
Project A
$
7,001.54
$
8,948.59
Project B](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6a6b1bde-c2f7-4db2-af15-07c7f5b7260a%2Fc2dec872-f3b5-4d10-beb1-0f78b356e989%2F5n5ytm_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Problem 8-10 NPV versus IRR [LO 3, 4]
Bruin, Incorporated has identified the following two mutually exclusive projects:
Year
Cash Flow (A)
Cash Flow (B)
0
-$ 41,300
-$ 41,300
1
19,100
6,300
2
17,800
14,200
3
15,200
17,900
4
8,400
30,300
a-1. What is the IRR for each of these projects?
Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.
a-2. If you apply the IRR decision rule, which project should the company accept?
b-1. Assume the required return is 11 percent. What is the NPV for each of these projects?
Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.
b-2. Which project will you choose if you apply the NPV decision rule?
a-1. Project A
Project B
a-2. Project acceptance
b-1. Project A
Project B
b-2. Project acceptance
19.78 %
18.92%
Project A
$
7,001.54
$
8,948.59
Project B
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