In: Finance
Crane Corp. management is evaluating two mutually exclusive
projects. The cost of capital is 15 percent. Costs and cash flows
for each project are given in the following table.
Year | Project 1 | Project 2 | ||
0 | -$1,291,014 | -$1,324,281 | ||
1 | 269,000 | 385,000 | ||
2 | 346,000 | 385,000 | ||
3 | 407,000 | 385,000 | ||
4 | 519,000 | 385,000 | ||
5 | 799,000 | 385,000 |
Calculate NPV and IRR of two projects. (Enter
negative amounts using negative sign, e.g. -45.25. Do not round
discount factors. Round other intermediate calculations and final
answer to 0 decimal places, e.g. 1,525. Round IRR answers to 2
decimal places, e.g. 15.25 or 12.25%.)
NPV of project 1 is | $ | ||
NPV of project 2 is | $ | ||
IRR of project 1 is | % | ||
IRR of project 2 is | % |
Which project should be accepted?
Crane Corp. should accept
a. project b. 1 neither project c. project 2 |