Mahjong, Inc., has identified the following two mutually exclusive projects:
| Year |
Cash Flow (A) |
Cash Flow (B) |
| 0 |
-$36,800 |
-$36,800 |
| 1 |
19,150 |
6,670 |
| 2 |
14,650 |
13,170 |
| 3 |
12,150 |
19,670 |
| 4 |
9,150 |
23,670 |
Required:
(a) What is the IRR for Project A?
21.9%
20.2%
22.32%
20.62%
21.26%
(b) What is the IRR for Project B?
21.44%
20.82%
21.86%
20.2%
19.78%
(c) If the required return is 16 percent, what is the NPV for Project A?
$3,536.41
$3,605.08
$3,433.41
$3,330.41
$3,261.74
(d) If the required return is 16 percent, what is the NPV for Project B?
$4,632.52
$4,279.56
$4,191.32
$4,411.92
$4,544.28
(e) At what discount rate would the company be indifferent between these two projects?
18.71%
19.1%
20.67%
20.28%
19.69%