Prestwood Products Company's cost of capital is 11.2% and the company is considering two mutually exclusive projects. In the past, it usually takes about 5 years for the company to recoup its investments from a good project. The projects' expected cash flows are as follows:   Project A's IRR is?

SWFT Individual Income Taxes
43rd Edition
ISBN:9780357391365
Author:YOUNG
Publisher:YOUNG
Chapter7: Deductions And Losses: Certain Business Expenses And Losses
Section: Chapter Questions
Problem 40P
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Prestwood Products Company's cost of capital is 11.2% and the company is considering two mutually exclusive projects. In the past, it usually takes about 5 years for the company to recoup its investments from a good project. The projects' expected cash flows are as follows:

 

Project A's IRR is?

Year Project A Project B
($300)
(387)
(193)
($405)
1
134
2
134
3
100
234
4
600
134
5
600
134
6
650
134
7
50
Transcribed Image Text:Year Project A Project B ($300) (387) (193) ($405) 1 134 2 134 3 100 234 4 600 134 5 600 134 6 650 134 7 50
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