Question: A company is analyzing two mutually exclusive projects, S and L,with the following cash flows: 01234 project S -1,000 870 250 25 25 project L

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

01234

project S -1,000 870 250 25 25
project L -1,000 0 250 400 845

The company's WACC is 8.5%. What is the IRR of thebetter project? (Hint: Note that the betterproject may or may not be the one with the higher IRR.)

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