Calculate the irr to the nearest percent for each of the, Ask an Expert

Management Studies

Bell Manufacturing is attempting to choose the better of two mutually exclusive projects for expanding the firm's warehouse capacity. The relevant cash flows for the projects are shown in the following table. The firm's cost of capital is 15%
Project X Project Y
Initial investment $500,000 $350,000
Year Cash Inflows
1 $100,000 $140,000
2 $120,000 $120,000
3 $150,000 $ 95,000
4 $190,000 $ 70,000
5 $250,000 $ 50,000

a) find out the IRR to the nearest percent for each of the projects

b) Assess the acceptability of each project on the basis of the IRRs found in part a.

c) Which project, on this basis is preferred?

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Business Management, Management Studies

Category:- Business Management
Reference No.:- M9120255

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