Matterhorn Mountain Gear is evaluating two projects with the following cash flows:
Year | Project X | Project Y | ||||
0 | −$318,400 | −$297,300 | ||||
1 | 146,600 | 137,550 | ||||
2 | 164,100 | 154,750 | ||||
3 | 129,200 | 120,500 | ||||
What interest rate will make the NPV for the projects equal?
13.73%
.34%
12.21%
18.80%
18.46%
Solution :
Year | Project X | Project Y | Difference between Project X and Project Y |
0 | -3,18,400 | -2,97,300 | -21,100 |
1 | 1,46,600 | 1,37,550 | 9050 |
2 | 1,64,100 | 1,54,750 | 9,350 |
3 | 1,29,200 | 1,20,500 | 8,700 |
IRR | 13.73% |
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Matterhorn Mountain Gear is evaluating two projects with the following cash flows: Year Project X Project Y wNN . $316,400 147,600 165,100 130,200 $293,800 138,050 155, 250 121,000 sces What interest rate will make the NPV for the projects equal? Multiple Choice
Matterhorn Mountain Gear is evaluating two projects with the following cash flows: Year Project X Project Y 0 −$317,400 −$295,550 1 147,100 137,800 2 164,600 155,000 3 129,700 120,750 What interest rate will make the NPV for the projects equal? A)18.88% B) .41% C)11.80% D)13.27% E)19.30%
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