Question: A company is evaluating two mutually exclusive projects. Both require an initial investment of $240,000 and have no appreciable disposal value. Their expected profits over

A company is evaluating two mutually exclusive projects. Both require an initial investment of $240,000 and have no appreciable disposal value. Their expected profits over their five-year lifetimes are as follows:

The company€™s cost of capital is 12%. Calculate the NPV and IRR for each project. Which project should be chosen? Why?

Year Project Alpha (S) Project Beta (S) 140,000 80,000 60,000 20,000 20,000 20,000 40,000 60,000 100,000 180,000

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