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

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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

The company's WACC is 10.0%. What is the IRR of the better project?(Hint: The better project may or may not be the one withthe higher IRR.) Round your answer to two decimal places.
Project S -$1,000 $901.79 $240 $5 $5
Project L -$1,000 $5 $260 $400 $751.37

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3.8 Ratings (533 Votes)

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 last cash flow press the NPV button and enter the weighted average cost 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:01234The company's WACC is 10.0%. What is the IRR of the better project?(Hint: The better project may or may not be the one withthe higher IRR.) Round your answer to two decimal places.Project S-$1,000$901.79$240$5$5Project L-$1,000$5$260$400$751.37

Project S	-$1,000	$901.79	$240	$5	$5
Project L	-$1,000	$5	$260	$400	$751.37