Zayas has identified the following two mutually exclusive projects. Year Cash Flow (A) Cash Flow (B) 0 -$78,500 -$78,500 1 $43,000 $21,000 2 $29,000 $28,000 3 $23,000 $34,000 4 $21,000 $41,000 a. What is the...

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Finance

Zayas has identified the following two mutually exclusiveprojects.
Year Cash Flow (A) Cash Flow (B)
0 -$78,500 -$78,500
1 $43,000 $21,000
2 $29,000 $28,000
3 $23,000 $34,000
4 $21,000 $41,000
a. What is the IRR for each project and if you apply the IRRdecision rule which project would you accept
b. If the required return is 11% what is the NPV for each ofthese projects? Which project would you choose?
If possible, please show formula and do not use excel.Thanks!

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4.1 Ratings (534 Votes)

a Project A Let the IRR be x Now Present Value of Cash OutflowsPresent Value of Cash Inflows 78500 4300010x 29000 10x2 2300010x3 2100010x4 Or x 20705 See Answer

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Year	Cash Flow (A)	Cash Flow (B)
0	-$78,500	-$78,500
1	$43,000	$21,000
2	$29,000	$28,000
3	$23,000	$34,000
4	$21,000	$41,000