Mahjong, Inc., has identified the following two mutually exclusive projects:
Year Cash Flow (A) Cash Flow (B)
0 –$40,000 –$40,000
1 19,300 5,700
2 14,800 12,200
3 12,300 18,700
4 9,300 22,700
Required:
(a) What is the IRR for Project A? (17.78%, 17.44%, 16.42%, 16.08%, 16.93%)
(b) What is the IRR for Project B? (14.45%,14.88%,14.02%,13.73%,15.17%)
(c) If the required return is 8 percent, what is the NPV for Project A? (7158.9,6800.95,7373.67,6944.13,7516.84)
(d) If the required return is 8 percent, what is the NPV for Project B? (7267.15, 6903.79, 7485.16,7049.14, 7630.51)
(e) At what discount rate would the company be indifferent between these two projects? (8.31%,7.89%,8.06%,8.73%,8.56%)