Question: Mary Inc. is considering mutually exclusive Projects A and B, whose cash flows are shown below. If the decision is made by choosing the project

Mary Inc. is considering mutually exclusive Projects A and B, whose cash flows are shown below. If the decision is made by choosing the project with the higher IRR, will there be any value loss due to the IRR-based decision? If there is a loss, how much value will be forgone? The WACC is assumed to be 9.5%.

Mary Inc. is considering mutually exclusive Projects A and B, whose cash

WACC: Year CF CF 9.5 % $73 $1,50 $740 $2,020 $4,100 $730 $740 1 $1,400 S1,520 $1,530

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