Mahjong, Inc., has identified the following two mutually exclusive projects:
| Year |
Cash Flow (A) |
Cash Flow (B) |
| 0 |
-$37,000 |
-$37,000 |
| 1 |
19,370 |
6,850 |
| 2 |
14,870 |
13,350 |
| 3 |
12,370 |
19,850 |
| 4 |
9,370 |
23,850 |
|
Required:
(a) What is the IRR for Project A?
22.94%
22.51%
21.85%
21.19%
20.76%
(b) What is the IRR for Project B?
21.13%
20.5%
20.07%
22.19%
21.76%
(c) If the required return is 14 percent, what is the NPV for Project A?
$5,330.4
$5,490.31
$5,063.88
$5,170.49
$5,596.92
(d) If the required return is 14 percent, what is the NPV for Project B?
$6,596.45
$6,800.46
$7,004.47
$6,460.44
$7,140.48
(e) At what discount rate would the company be indifferent between these two projects?
19.26%
20.22%
18.3%
18.68%
19.84%