THE FIRST *TWO* DROP_DOWN OPTIONS ARE

NEITHER BOTH PROJECT A & B PROJECT A PROJECT B

THE THIRD DROP DOWN OPTIONs ARE

YES NO

FOURTH OPTIONS ARE

THE NPV AND IRR APPROACHES USE THE SAME REINVESTMENT RATE ASSUMPTION AND SO BOTH APPROACHES REACH THE SAME PROJECT ACCEPTANCE WHEN MUTUALLY EXCLUSIVE PROJECTS ARE CONSIDERED.

OR

THE NPV AND IRR APPROACHES USE DIFFERENT REINVESTMENT RATE ASSUMPTION AND SO THERE CAN BE CONFLICT IN PROJECT ACCEPTANCE WHEN MUTUALLY EXCLUSIVE PROJECTS ARE CONSIDERED.

FIFTH OPTIONS ARE

WACC

IRR

Quantitative Problem: Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average is 8%. What is Project A's IRR? Do not round intermediate calculations. Round your answer to two decimal places. % What is Project B's IRR? Do not round intermediate calculations. Round your answer to two decimal places. % If the projects were independent, which project(s) would be accepted according to the IRR method? If the projects were mutually exclusive, which project(s) would be accepted according to the IRR method? Could there be a conflict with project acceptance between the NPV and IRR approaches when projects are mutually exclusive? The reason is -Select- Reinvestment at the is the superior assumption, so when mutually exclusive projects are evaluated the approach should be used for the capital budgeting decision