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Marge Simpson Inc. has following business opportunities with following cash flow information. Assume Marge’s opportunity cost...

Marge Simpson Inc. has following business opportunities with following cash flow information. Assume Marge’s opportunity cost of capital is 12%.

Year

Project A

Project B

0

−$20,000

−$20,000

1

15,000

2,000

2

15,000

2,500

3

13,000

3,000

4

  3,000

50,000

Which business opportunity is better? Use IRRA=54.7%, IRRB=33.3%, cross over point=14.1%. (Hint: provide your choice with different discount rate)

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jeff jeffy answered 2 years ago
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