Mary Inc. is considering mutually exclusive Projects A and B, whose cash flows are shown below....

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Finance

Mary Inc. is considering mutually exclusive Projects A and B,whose cash flows are shown below. If the decision is made bychoosing the project with the higher IRR, will there be any valueloss due to the IRR-based decision? If there is a loss, how muchvalue will be forgone? The WACC is assumed to be 9.5%.
WACC:
Year
9.5%
0
1
2
3
4
CFA
?$2,020
$730
$730
$740
$740
CFB
?$4,100
$1,400
$1,500
$1,520
$1,530
Use a financial calculator and show all steps from thecalculator used. DO NOT USE EXCEL. Thank you and show all steps

Answer & Explanation Solved by verified expert

4.0 Ratings (790 Votes)

Project A Net present value is calculated using a financial calculator by inputting the below Press the CF button CF0 2020 It is entered with a negative sign since it is a cash outflow Cash flow for each year should be entered Press Enter and down arrow after inputting each cash flow After entering the last cash flow cash flow press the NPV button and enter the weighted average cost of capital of See Answer

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