Consider the following two investment alternatives: The firms MARR is known to be 15%. (a) Compute the

Question:

Consider the following two investment alternatives:

Net Cash Flow Project A Project B п -$20,000 -$10,000 $0 $5,500 $5,500 $0 $5,500 $40,000 3 IRR 30% PW(15%) $6,300

The firm€™s MARR is known to be 15%.
(a) Compute the IRR of Project B.
(b) Compute the PW of Project A.
(c) Suppose that Projects A and B are mutually exclusive. Using the IRR, which project would you select?

MARR
Minimum Acceptable Rate of Return (MARR), or hurdle rate is the minimum rate of return on a project a manager or company is willing to accept before starting a project, given its risk and the opportunity cost of forgoing other...

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