In: Finance
. Home Grown Café has the following two projects with their cash flows below:
Year |
Project 1 CFs |
Project 2 CFs |
0 |
-$41,600 |
-$30000 |
1 |
16000 |
6000 |
2 |
13000 |
11000 |
3 |
18000 |
12000 |
4 |
15000 |
19000 |
Calculate the IRR (to the closest whole number) for each project and decide which project should be accepted if the required rate of return (cost of capital) is 11% and a) the projects are independent, b) the projects are mutually exclusive.