Question: Al Huda Company considers two mutually exclusive projects. For both projects, the required rate of return is 10% Cash Flows Year 0 1 2 3

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

Cash Flows

Year 0 1 2 3 4
Project 1 - 100 36 36 36 36
Project 2 - 100 0 0 0 175

1. What is the NPV of the two projects?

2. What is the IRR of the two projects?

3. What is the value of the cross over point? What does it mean?

4. Do the NPV and the IRR agree or conflict? If they conflict, explain the reason of this conflict?

5. What is your recommendation? Elaborate

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