GUI company is considering investing in Project A or Project B. Project A generates the following...

GUI company is considering investing in Project A or Project B. Project A generates the following cash flows: year “zero” = 313 dollars (outflow); year 1 = 297 dollars (inflow); year 2 = 337 dollars (inflow); year 3 = 330 dollars (inflow); year 4 = 149 dollars (inflow). Project B generates the following cash flows: year “zero” = 510 dollars (outflow); year 1 = 140 dollars (inflow); year 2 = 110 dollars (inflow); year 3 = 210 dollars (inflow); year 4 = 140 dollars (inflow). The MARR is 10%. Compute the External Rate of Return (ERR) of the BEST project. (if your answer is 10.25% then write 10.25 as your answer, not 0.1025)

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Expert Solution

1st we will calculate ERR then we will comapre it wirh MARR.

If ERR > MARR , then we will accept the project.

If ERR < MARR, then we will reject the project.

Detailed working of the question is proded is images attached.

jeff jeffy answered 1 year ago

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