Question: Mahjong, Inc., has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 $36,400 $36,400 1 18,710 6,310 2 14,210

Mahjong, Inc., has identified the following two mutually exclusive projects:

Year Cash Flow (A) Cash Flow (B)
0 $36,400 $36,400
1 18,710 6,310
2 14,210 12,810
3 11,710 19,310
4 8,710 23,310

Required:
(a) What is the IRR for Project A?

(b) What is the IRR for Project B?

(c) If the required return is 12 percent, what is the NPV for Project A?

(d) If the required return is 12 percent, what is the NPV for Project B?

(e) At what discount rate would the company be indifferent between these two projects?

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