In: Finance
The Winston Co. is considering two mutually exclusive projects with the following cash flows:
Project A Project B
Year Cash Flow Cash Flow
0 -$75,000 -$60,000
1 $30,000 $25,000
2 $35,000 $30,000
3 $35,000 $25,000
B-1 what is the IRR of project A?
B-2 What is the IRR of project B?
B-3 Based on the IRR rule, which project should be accepted and why?
B-4 At what required rate of return will the company be indifferent between the two projects?
B-5 If Winston company has a required rate of return of 10%, which project (if any) should it accept and why?
B-6 If the company has a required rate of return of 15%, which project (if any) should it accept and why?