Zayas, LLC, has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 ?$ 53,000 ?$ 53,000 1 29,000 16,700 2 23,000 20,700 3 17,500 25,000 4 12,600 25,700 What is the...

70.2K

Verified Solution

Question

Finance

Zayas, LLC, has identified the following two mutually exclusiveprojects:
Year Cash Flow (A) Cash Flow (B)
0 ?$ 53,000 ?$ 53,000
1 29,000 16,700
2 23,000 20,700
3 17,500 25,000
4 12,600 25,700

What is the IRR for each of these projects?
If you apply the IRR decision rule, which project should thecompany accept?
Assume the required return is 13 percent. What is the NPV foreach of these projects?
Which project will you choose if you apply the NPV decisionrule?

Answer & Explanation Solved by verified expert

4.4 Ratings (809 Votes)

Internal Rate of Return Cash Flow A Internal rate of return is calculated using a financial calculator by inputting the below Press the CF button CF0 53000 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 IRR and CPT button to get the IRR of the project The IRR of See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

Zayas, LLC, has identified the following two mutually exclusiveprojects:YearCash Flow (A)Cash Flow (B)0?$53,000?$53,000129,00016,700223,00020,700317,50025,000412,60025,700What is the IRR for each of these projects?If you apply the IRR decision rule, which project should thecompany accept?Assume the required return is 13 percent. What is the NPV foreach of these projects?Which project will you choose if you apply the NPV decisionrule?

Year	Cash Flow (A)			Cash Flow (B)
0		?$	53,000		?$	53,000
1			29,000			16,700
2			23,000			20,700
3			17,500			25,000
4			12,600			25,700