wo mutually exclusive alternatives A and B are being considered: Year A 1 A 2 0 1 2 3 4 5 -$2500 $746 $746 $746 $746 $746 -$6000 $1664 $1664 $1664 $1664 $1664 The minimum attractive rate of return is 8%. After calculation we can ind that the internal rates of return: for A 1, IRRA1 = 17%, for B,
wo mutually exclusive alternatives A and B are being considered: Year A 1 A 2 0 1 2 3 4 5 -$2500 $746 $746 $746 $746 $746 -$6000 $1664 $1664 $1664 $1664 $1664 The minimum attractive rate of return is 8%. After calculation we can ind that the internal rates of return: for A 1, IRRA1 = 17%, for 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
Related questions
Question
![Two mutually exclusive alternatives A and B are being considered:
Year
A 1
A 2
0
1
-$2500 $746
-$6000 $1664
2
3
4
5
$746 $746 $746
$746
$1664 $1664 $1664 $1664
The minimum attractive rate of return is 8%. After calculation we can
find that the internal rates of return: for A 1, IRRA1 = 17%, for B,
IRRA2 = 14% and for A 2-A 1, IRRA2-A1 = 9.8%. Which of the following
statements is correct?
Select A 1 because IRRA 1 > IRRA 2
Select neither A 1 nor A 2 because IRRA 1 > MARR and IRRA 2 >
MARR
Select A 1 because IRRA 2-A 1 > MARR
select A 2 because IRR 2-1 > MARR](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc081ddcc-eba2-40ae-b68f-7408fff0456c%2Ffd8c797b-2a4b-4a59-bed5-2f6beca92973%2Fx6dl0s_processed.png&w=3840&q=75)
Transcribed Image Text:Two mutually exclusive alternatives A and B are being considered:
Year
A 1
A 2
0
1
-$2500 $746
-$6000 $1664
2
3
4
5
$746 $746 $746
$746
$1664 $1664 $1664 $1664
The minimum attractive rate of return is 8%. After calculation we can
find that the internal rates of return: for A 1, IRRA1 = 17%, for B,
IRRA2 = 14% and for A 2-A 1, IRRA2-A1 = 9.8%. Which of the following
statements is correct?
Select A 1 because IRRA 1 > IRRA 2
Select neither A 1 nor A 2 because IRRA 1 > MARR and IRRA 2 >
MARR
Select A 1 because IRRA 2-A 1 > MARR
select A 2 because IRR 2-1 > MARR
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