Question: A company plans to launch two mutually exclusive projects and requires rate of return of 12 %. year Green energy project Power plant project 0

A company plans to launch two mutually exclusive projects and requires rate of return of 12 %.

year

Green energy project

Power plant project

0

(150,000)

(130,000)

1

120,000

110,000

2

70,000

40,000

3

50,000

20,000

a. Calculate NPV of both projects!

b. Calculate IRR of both projects!

c. Based on your answers, on point a and b, which project should be accepted?

d. Suppose that a different new firm evaluates Power plant project and requires rate of return is 25%. should this firm go with the project?

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