A company is considering two mutually exclusive projects,A and B)Project A requires an initial investment of $100, followed by cash flows of $95, $20, and $5.Project B requires an initial investment of $100, followed by cash flows of $0, $20, and $130.What is the IRR of the project that is best for the company's shareholders? The firm's cost of capital is 10 percent.
A)15.24 percent
B)15.96 percent
C)15.42 percent

Question

Quizplus · Accepted Answer

IRR of Project A = 15.24%IRR of Project B = 15.96%Project B has a higher IRR than Project A, so Project B is the better investment for the company's shareholders.

A Company Is Considering Two Mutually Exclusive Projects,A and B)Project