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Business, 20.03.2020 03:39 Adanysa

Bruin, Inc., has identified the following two mutually exclusive projects:

Year Cash Flow (A) Cash Flow (B)
0 –$28,900 –$28,900
1 14,300 4,250
2 12,200 9,750
3 9,150 15,100
4 5,050 16,700

a. What is the IRR for each of these projects?
b. Using the IRR decision rule, which project should the company accept?
i. Project A
ii. Project B

c. Is this decision necessarily correct?
d. If the required return is 10 percent, what is the NPV for each of these projects?
e. Which project will the company choose if it applies the NPV decision rule?
i. Project A
ii. Project B
f. At what discount rate would the company be indifferent between these two projects?

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Answers: 1

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Bruin, Inc., has identified the following two mutually exclusive projects:

Year Cash Fl...
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