1.

2.Project S requires an initial outlay at t = 0 of $18,000, and its expected cash flows would be $4,500 per year for 5 years. Mutually exclusive Project L requires an initial outlay at t = 0 of $28,500, and its expected cash flows would be $10,550 per year for 5 years. If both projects have a WACC of 13%, which project would you recommend?

Select the correct answer.

a. Project L, because the NPVL > NPVS.

b. Project S, because the NPVS > NPVL.

c. Neither Project S nor L, because each project's NPV

d. Both Projects S and L, because both projects have NPV's > 0.

e. Both Projects S and L, because both projects have IRR's > 0

A company is analyzing two mutually exclusive projects, S and L, with the following cash flows: 0 1 2 3 4 H Projects -$1,000 $897.30 $250 $5 $10 Project L - $1,000 $5 $260 $400 $752.72 The company's WACC is 9.0%. What is the IRR of the better project? (Hint: The better project may or may not be the one with the higher IRR.) Round your answer to two decimal places. % A firm is considering two mutually exclusive projects, X and Y, with the following cash flows: 0 1 2 3 4 Project X -$1,000 $90 $280 $430 $700 Project Y -$1,000 $1,000 $110 $55 $55 The projects are equally risky, and their WACC is 13%. What is the MIRR of the project that maximizes shareholder value? Do not round intermediate calculations. Round your answer to two decimal places. %