A company is evaluating two mutually exclusive projects. Both require an initial investment of $240,000 and have no appreciable disposal value. Their expected profits over their five-year lifetimes are as follows:
The company's cost of capital is 12%. Calculate the NPV and IRR for each project. Which project should be chosen? Why?

Question

A company is evaluating two mutually exclusive projects. Both require an initial investment of $240,000 and have no appreciable disposal value. Their expected profits over their five-year lifetimes are as follows: 
  The company's cost of capital is 12%. Calculate the NPV and IRR for each project. Which project should be chosen? Why?

Quizplus · Accepted Answer

The Answer of A company is evaluating two mutually exclusive projects. Both require an initial investment of $240,000 and have no appreciable disposal value. Their expected profits over their five-year lifetimes are as follows: 
  The company's cost of capital is 12%. Calculate the NPV and IRR for each project. Which project should be chosen? Why?

A Company Is Evaluating Two Mutually Exclusive Projects