Consider two investments with the following sequences of cash flows: Net cash fl
ID: 1190234 • Letter: C
Question
Consider two investments with the following sequences of cash flows:
Net cash flow
n
project A
Project B
0
($100,000)
($100,000)
1
$10,500
$70,000
2
$60,000
$50,000
3
$80,000
$20,500
Compute the IRR for each investment.
At MARR= 10%, determine the acceptability of each project.
If A and B are mutually exclusive projects, which project would you select on the basis of the rate of return on incremental investment?
Net cash flow
n
project A
Project B
0
($100,000)
($100,000)
1
$10,500
$70,000
2
$60,000
$50,000
3
$80,000
$20,500
Explanation / Answer
Consider two investments with the following sequences of cash flows: Net cash fl