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Consider the following two mutually exclusive projects:
Year Cash Flow (A) Cash Flow (B)
0 $ 491,000 $ 92,000
1 114,000 52,000
2 134,000 36,000
3 79,000 33,500
4 474,000 28,600
Whichever project you choose, if any, you require a 15% return on your investment.
What is the IRR for each project? (Round the final answers to 2 decimal places.)
If you apply the IRR criterion, which investment will you choose?
Project A
Project B
What is the profitability index for each project? (Do not round intermediate calculation. Round
the final answers to 3 decimal places.)
Project A
Project B
If you apply the profitability index criterion, which investment will you choose?
Project A
Project B
Based on your answers in (a) through (e), which project will you finally choose?
Project A
Project B

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Consider the following two mutually exclusive projectsYear .pdf

  • 1. Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 $ 491,000 $ 92,000 1 114,000 52,000 2 134,000 36,000 3 79,000 33,500 4 474,000 28,600 Whichever project you choose, if any, you require a 15% return on your investment. What is the IRR for each project? (Round the final answers to 2 decimal places.) If you apply the IRR criterion, which investment will you choose? Project A Project B What is the profitability index for each project? (Do not round intermediate calculation. Round the final answers to 3 decimal places.) Project A Project B If you apply the profitability index criterion, which investment will you choose? Project A Project B Based on your answers in (a) through (e), which project will you finally choose? Project A Project B