CalcuLate the IRR of each project A and B All techniques, conflicting rankings N
ID: 2759165 • Letter: C
Question
CalcuLate the IRR of each project A and B All techniques, conflicting rankings Nicholson Roofing Materials, Inc., is considering two mutually exclusive projects, each with an initial investment of $100,000. The company board of directors has set a 4-year payback requirement and has set its cost of capital at 11%. The cash inflows associated with the two projects are shown in the following table: Calculate the payback period for each project Rank the projects by payback period. Calculate the NPV of each project Rank the project by NPV. Calculate the IRR of each project. Rank the project by IRR. Make a recommendation. The payback period of project A is 3.33 yean. (Round to two decimal places) The payback period of project B is 1.50 yean (Round to two decimal places.) According to the payback method, which project should the firm choose? Project A Project B The NPV of project A is $26916.13561 (Round to the nearest cent.) The NPV of project B is $ 33328.83443 (Round to the nearest cent) According to the NPV method, which project should the firm choose (Select the best Project A Project B c. The IRR of project A is %. (Round to two decimal places.)Explanation / Answer
Project A Year 0 1 2 3 4 5 6 CF -100000 30000 30000 30000 30000 30000 30000 IRR 19.91% Project B Year 0 1 2 3 4 5 6 CF -100000 75000 50000 10000 10000 10000 10000 IRR 30.07%