Question

In: Finance

A company is analyzing two mutually exclusive projects, S and L, with the following cash flows:...

A company is analyzing two mutually exclusive projects, S and L, with the following

cash flows: 0 1 2 3 4

Project S -$1,000 $897.81 $240 $5 $5

Project L -$1,000 $0 $260 $380 $861.89

The company's WACC is 8.5%. What is the IRR of the better project? (Hint: The better project may or may not be the one with the higher IRR.) Round your answer to two decimal places.

Solutions

Expert Solution

Ans IRR of Project S: 11.97%

IRR of Project L: 12.85%


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