A company is analyzing two mutually exclusive projects, S and L, with the following cash flows: 0 1 2 3 4 Project...

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Finance

A company is analyzing two mutually exclusive projects, S and L,with the following cash flows:
0 1 2 3 4
Project S -$1,000 $887.30 $240 $5 $10
Project L -$1,000 $10 $260 $380 $766.73
The company's WACC is 10.0%. What is the IRR of the betterproject? (Hint: The better project may or may not be theone with the higher IRR.) Round your answer to two decimalplaces.
%

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4.3 Ratings (640 Votes)

The net present value is the capital budgeting technique used to evaluate mutually exclusive projects Project S Net present value is solved here using a financial calculator The steps to solve on the financial calculator Press the CF button CF0 1000 It is entered with a negative sign since it is a cash outflow Cash flow for all the years should be entered Press Enter and down arrow after inputting each cash flow After entering the See Answer

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Transcribed Image Text

A company is analyzing two mutually exclusive projects, S and L,with the following cash flows:01234Project S-$1,000$887.30$240$5$10Project L-$1,000$10$260$380$766.73The company's WACC is 10.0%. What is the IRR of the betterproject? (Hint: The better project may or may not be theone with the higher IRR.) Round your answer to two decimalplaces.%

Project S	-$1,000	$887.30	$240	$5	$10
Project L	-$1,000	$10	$260	$380	$766.73