Question: Two projects being considered are mutually exclusive and have the following projected cash flows: Project A Project B Year Cash Flow Cash Flow 0 -$50,000

Two projects being considered are mutually exclusive and have the following projected cash flows:

Project A Project B

Year Cash Flow Cash Flow

0 -$50,000 -$50,000

1 15,625 0

2 15,625 0

3 15,625 0

4 15,625 0

5 15,625 99,500

If the required rate of return on these projects is 10 percent, find

a. which project has the higher NPV.

NPVa=

NPVb=

b. which project has the higher IRR.

IRRa=

IRRb=

which project has the higher MIRR.

MIRRa =

MIRRb =

Which project should be accepted by the company? Why?

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