Gordon Growth company has identified the two mutually projects. Both project A and B have initial cash
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Question:
Gordon Growth company has identified the two mutually projects. Both project A and B have initial cash outlay of $37,500 and both projects have four years lives. Cash inflows from project A and B over their four years lives are as follows:
Project A: 1styear = $17,300; 2ndyear = $16,200; 3rdyear = $13,800, 4thyear = $7,600
Project B: 1styear = $5,700; 2ndyear = $12,900; 3rdyear = $16,300, 4thyear = $27,500
Using IRR decision rule, which project should the company accept?
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