17- Problem Walk-Through

A company is analyzing two mutually exclusive projects, S and L, with the following cash flows:

0

1

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3

4

Project S	-$1,000	$888.71	$250	$10	$10
Project L	-$1,000	$0	$250	$400	$822.21

The company's WACC is 8.0%. 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.

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20 -A project has annual cash flows of $5,500 for the next 10 years and then $7,000 each year for the following 10 years. The IRR of this 20-year project is 10.66%. If the firm's WACC is 8%, what is the project's NPV? Do not round intermediate calculations. Round your answer to the nearest cent.

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