rest dollar and round IRR percentages to one decimal place (for example, 15.68% rounds to 15.7% and should be entered as "15.7" in the answer box). System 1 System 2 NPV $ $ IRR % % 2. Why is the project with the larger NPV the correct choice for the company
NPV Versus
Year System I System II
0 $(120,000) $(120,000)
1 - 76,628
2 162,708 76,628
The company’s cost of capital is 10 percent. The
and Exhibit 19B.2 must be used to solve the following problems.
Required:
1. Compute the NPV and the IRR for each investment. If required, round intermediate calculations and NPV to the nearest dollar and round IRR percentages to one decimal place (for example, 15.68% rounds to 15.7% and should be entered as "15.7" in the answer box).
System 1 System 2
NPV $ $
IRR % %
2. Why is the project with the larger NPV the correct choice for the company?
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