Question: Bruin, Inc., has identified the following two mutually exclusive projects: Year 0 1 2 3 4 Cash Flow (A) -$28,600 14,000 11,900 9,000 4,900 Cash

 Bruin, Inc., has identified the following two mutually exclusive projects: Year0 1 2 3 4 Cash Flow (A) -$28,600 14,000 11,900 9,000

Bruin, Inc., has identified the following two mutually exclusive projects: Year 0 1 2 3 4 Cash Flow (A) -$28,600 14,000 11,900 9,000 4,900 Cash Flow (B) -$28,600 4,100 9,600 14,800 16,400 a-1 What is the IRR for each of these projects? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) 20.00 % Project A Project B 19.00% a-2 Using the IRR decision rule, which project should the company accept? O Project A O Project B a-3 Is this decision necessarily correct? Yes b-1 If the required return is 10 percent, what is the NPV for each of these projects? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) $ Project A Project B 6,331.00 8,139.00 $ b-2Which project will the company choose if it applies the NPV decision rule? Project A O Project B c. At what discount rate would the company be indifferent between these two projects? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Discount rate 16.00 %

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!