Two mutually exclusive investments are available to a firm. Project C, requiring a capital investment of $150,000,

Question:

Two mutually exclusive investments are available to a firm. Project C, requiring a capital investment of $150,000, will generate an annual profit of $43,000 for six years. Project D is expected to yield an annual profit of $30,000 for six years on an initial investment of $100,000.
a. Calculate the on each project. Based upon their IRRs, which project should be selected?
b. Which project should be selected if the firm’s is 15%?
c. Which project should be selected if the firm’s is 12%?
Internal Rate of Return
Internal Rate of Return of IRR is a capital budgeting tool that is used to assess the viability of an investment opportunity. IRR is the true rate of return that a project is capable of generating. It is a metric that tells you about the investment... Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...