Question: PQR Co., has identified the following two mutually exclusive projects. Both have a required rate of return of 15 percent. Year Cash Flow for A

PQR Co., has identified the following two mutually exclusive projects. Both have a required rate of return of 15 percent.

Year Cash Flow for A in $ Cash Flow for B in $

0 -135884 -345945

1 52686 114522

2 62008 159325

3 61899 125044

4 37408 91389

Which project should PQR accept? Answer 1 for A and 2 for B.

I thought we accept the one with the highest IRR rate. But my friend did her assignment and picked the higher IRR rate and it said it was wrong. So I am confused on how to solve this problem.

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