Exercise E26-25

Refer to the data regarding Juda Products in exercise E26-24. Compare the IRR of eaxh project, and use this information to identify the better investment.

Project A: should be 8-9% IRR

E26-24

Project A: Cost $290,000 and offera seven annual net cash inflows of $57,000. Juda Products requires an annual return of 14% on investments of this nature.

Project B: Cost of $395,000 and offers 10 annual net cash inflows of $70,000. Juda Products demands an annual return of 12% on investments of this nature.