Al Huda Company considers two mutually exclusive projects For both projects, the required rate of return is 10 1 What is the value of the cross over point What does it mean 2 Do the NPV and the IRR agree or conflict If they conflict, explain the reason of this conflict 3 What is your recommendation Elaborate Project 1 Project 2 Year Cash Flow Discount 10 Discount Cash Flow Year Cash Flow Discount 10 Discount Cash Flow 0 100 1 100 000000000 0 100 1 100 000000000 1 36 0 91 32 727272727 1 0 0 909091 0 000000000 2 36 0 83 29 752066116 2 0 0 826446 0 000000000 3 36 0 75 27 047332832 3 0 0 751315 0 000000000 4 36 0 68 24 588484393 4 175 0 683013 119 527354689 NPV 14 12 NPV 19 53 IRR 16 367 IRR 15 016

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Question: Al Huda Company considers two mutually exclusive projects. For both projects, the required rate of return is 10% 1.What is the value of the cross

Al Huda Company considers two mutually exclusive projects. For both projects, the required rate of return is 10%

1.What is the value of the cross over point? What does it mean? 2. Do the NPV and the IRR agree or conflict? If they conflict, explain the reason of this conflict? 3. What is your recommendation? Elaborate


	Project 1				Project 2
Year	Cash Flow	Discount 10%	Discount Cash Flow	Year	Cash Flow	Discount 10%	Discount Cash Flow
0	-100	1	-100.000000000	0	-100	1	-100.000000000
1	36	0.91	32.727272727	1	0	0.909091	0.000000000
2	36	0.83	29.752066116	2	0	0.826446	0.000000000
3	36	0.75	27.047332832	3	0	0.751315	0.000000000
4	36	0.68	24.588484393	4	175	0.683013	119.527354689
		NPV	14.12			NPV	19.53
		IRR	16.367%			IRR	15.016%

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