a) What are the IRRs of these two projects? (Use the formula provided in the appendix) b) If you are told only the IRRs of the projects, which would you choose? c) What did you ignore when you made your decision in part (b)?

Principles of Accounting Volume 1
19th Edition
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax
Chapter16: Statement Of Cash Flows
Section: Chapter Questions
Problem 5TP: If you had $100,000 available for investing, which of these companies would you choose to invest...
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As a newly employed Chief Finance Officer of EKM School Complex, you are offered the following two mutually exclusive projects. Cash flows (GHS) a) What are the IRRs of these two projects? (Use the formula provided in the appendix) b) If you are told only the IRRs of the projects, which would you choose? c) What did you ignore when you made your decision in part (b)? d) According to the NPV rule, which one of these two projects should be pursued? Assume appropriate discount rate of 15%. Year Project A Project B 0 -5,000 -100,000 1 4,500 65,000 2 4,500 65,000
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ISBN:
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