Darpa Plc is a high technology, UK based company In the beginning of January 2020, Darpas Chief Executive Officer (CEO) considered to choose one of the two mutually exclusive investment projects which will start in May 2020 The new projects will be equity financing and have the following cash flows Project Initial investment in year 0 Cash flow in year 1 Cash flow in year 2 Cash flow in year 3 A 22,000 9,000 9,000 9,000 B 22,000 0 0 28,000 Assuming you are the Chief Financial Officer (CFO) of Darpa Plc, at what interest rate (i e discount rate) would you prefer project B to A Write down the detailed reasoning that supports your choice and recommendation to the CEO Draw tables and charts where applicable What are the approximate internal rate of returns (IRRs) of the two projects Critically discuss how to use the estimated IRRs in the current investment decision

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Question: Darpa Plc is a high-technology, UK-based company. In the beginning of January 2020, Darpas Chief Executive Officer (CEO) considered to choose one of the two

Darpa Plc is a high-technology, UK-based company. In the beginning of January 2020, Darpas Chief Executive Officer (CEO) considered to choose one of the two mutually exclusive investment projects which will start in May 2020. The new projects will be equity-financing and have the following cash flows:

Project	Initial investment in year 0	Cash flow in year 1	Cash flow in year 2	Cash flow in year 3
A	-22,000	+9,000	+9,000	+9,000
B	-22,000	0	0	+28,000

Assuming you are the Chief Financial Officer (CFO) of Darpa Plc, at what interest rate (i.e. discount rate) would you prefer project B to A? Write down the detailed reasoning that supports your choice and recommendation to the CEO. Draw tables and charts where applicable.

What are the approximate internal rate of returns (IRRs) of the two projects? Critically discuss how to use the estimated IRRs in the current investment decision.

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