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Garage Inc has identified the following two mutually exclusive projects Year Cash Flow

Garage, Inc., has identified the following two mutually exclusive projects:

Year Cash Flow (A)   Cash Flow (B)
0   -28,400       -28,400  
1   13,800       4,000  
2   11,700       9,500  
3   8,900       14,600  
4   4,800       16,200  

 

a1. What is the IRR for each of these projects? A =17.13 % & B=16.59%.
b1. If the required return is 12 percent, what is the NPV for each of these projects? A=2633.93 & B= 3432.15
c. At what discount rate would the company be indifferent between these two projects? (I can't figure this out! )

 

II

An investment has an installed cost of $533,800. The cash flows over the four-year life of the investment are projected to be $215,850, $232,450, $199,110, and $147,820.

 

1.If the discount rate is infinite, what is the NPV?

2.At what discount rate is the NPV just equal to zero?

 

May 14 2020 View more View Less

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