Bruin, Inc., has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 –$36,200 –$36,200 1 18,700...

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Finance

Bruin, Inc., has identified the following two mutuallyexclusive projects:

Year Cash Flow (A) Cash Flow (B)
0 –$36,200        –$36,200
1 18,700        6,300
2 14,200        12,800
3 11,700        19,300
4 8,700        23,300

a. What is the IRR for Project A?

b. What is the IRR for Project B?

c. If the required return is 10 percent, whatis the NPV for Project A?

d. If the required return is 10 percent, whatis the NPV for Project B?

e. At what discount rate would the company beindifferent between these two projects?

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3.6 Ratings (496 Votes)

Answer aThe cash flows for project AYear 036200Year 118700Year 214200Year 311700Year 48700We can determine the IRR using excelSo the value of IRR2035Answer See Answer

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Bruin, Inc., has identified the following two mutuallyexclusive projects: YearCash Flow (A)Cash Flow (B)0–$36,200 –$36,200 118,700 6,300 214,200 12,800 311,700 19,300 48,700 23,300 a. What is the IRR for Project A? b. What is the IRR for Project B? c. If the required return is 10 percent, whatis the NPV for Project A? d. If the required return is 10 percent, whatis the NPV for Project B? e. At what discount rate would the company beindifferent between these two projects?

Year	Cash Flow (A)	Cash Flow (B)
0	–$36,200	–$36,200
1	18,700	6,300
2	14,200	12,800
3	11,700	19,300
4	8,700	23,300