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Item $1$

Problem $9-12$ NPV versus IRR $($LO$1,5)$

Parkallen Inc. has identified the following two mutually exclusive projects:

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YearCash Flow $($A$)$Cash Flow $($B$)0$$$29,000$$$29,000114,4004,300212,3009,80039,20015,20045,10016,800$

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a$-1.$ What is the IRR for each of these projects? $($Do not round intermediate calculations. Round the final answers to $2$ decimal places.$)$

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$$IRRProject A $\%$Project B $\%$

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a$-2.$ Using the IRR decision rule, which project should the company accept?

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multiple choice $1$

Project A

Project B

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a$-3.$ Is this decision necessarily correct?

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multiple choice $2$

Yes

No

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b$-1.$ If the required return is $11\%,$ what is the NPV for each of these projects? $($Do not round intermediate calculations. Round the final answers to $2$ decimal places. Omit $ sign in your response.$)$

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$$NPVProject A$ Project B$

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b$-2.$ Which project will the company choose if it applies the NPV decision rule?

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multiple choice $3$

Project A

Project B

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c$.$ At what discount rate would the company be indifferent between these two projects? $($Do not round intermediate calculations. Round the final answer to $2$ decimal places.$)$

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Discount rate$\%$