17) (12 points) Eisenhower Enterprises has two mutually exclusive projects under consideration. Their cash flows are...

 

Transcribed Image Text:

17) (12 points) Eisenhower Enterprises has two mutually exclusive projects under consideration. Their cash flows are expected to be as follows: Year Project A -23,600 10,000 10,000 0 1 2 3 10,000 10,000 Project B -23,600 0 5,000 10,000 32,675 A) What is the NPV and IRR for Project A if the required return is 10%? B) What is the NPV and IRR for Project B if the required return is 10% C) If NPV and IRR give conflicting answers, which should be used to select the mutually exclusive project to be pursued? 17) (12 points) Eisenhower Enterprises has two mutually exclusive projects under consideration. Their cash flows are expected to be as follows: Year Project A -23,600 10,000 10,000 0 1 2 3 10,000 10,000 Project B -23,600 0 5,000 10,000 32,675 A) What is the NPV and IRR for Project A if the required return is 10%? B) What is the NPV and IRR for Project B if the required return is 10% C) If NPV and IRR give conflicting answers, which should be used to select the mutually exclusive project to be pursued?

Answer rating: 100% (QA)

A To calculate the NPV Net Present Value of Project A we need to discount the cash flows at the required return rate of 10 The formula for NPV is NPV ... View the full answer