Question: Bruin, Incorporated, has identified the following two mutually exclusive projects: Cash Flow (A) Cash Flow (8) -$ 67,000 -$ 67,000 29,300 Year e 1

Bruin, Incorporated, has identified the following two mutually exclusive projects: Cash Flow

 

Bruin, Incorporated, has identified the following two mutually exclusive projects: Cash Flow (A) Cash Flow (8) -$ 67,000 -$ 67,000 29,300 Year e 1 2 a-1. What is the IRR for each of these projects? Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. a-2. If you apply the IRR decision rule, which project should the company accept? b-1. Assume the required return is 13 percent. What is the NPV for each of these projects? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. b-2. Which project will you choose of you apply the NPV decision rule? a-1. Project A Project B 43,000 37,000 24,500 15,400 c-1. Over what range of discount rates would you choose Project A? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. c-2. Over what range of discount rates would you choose Project B? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. d. At what discount rate would you be indifferent between these two projects? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. a-2. b-1. b-2. c-1. c-2. d. 33,300 39,000 24,300 Project A Project B Discount rate % % %

Step by Step Solution

3.54 Rating (158 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock

a1 To calculate the IRR of each project we need to solve for the discount rate that sets the NPV of the cash flows to zero We can use the IRR function in Excel or a financial calculator to solve for t... View full answer

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!