Here are the cash flows for two mutually exclusive projects: Project C0 C1 C2 C3 A...

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Here are the cash flows for two mutually exclusive projects: Project C0 C1 C2 C3 A...

Here are the cash flows for two mutually exclusive projects: Project C0 C1 C2 C3 A −$ 21,800 +$ 9,592 +$ 9,592 +$ 9,592 B − 21,800 0 0 + 29,430 What is the IRR of each project? (Round your answers to 2 decimal places.)

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Answer 1

Answer #1

Let irr be x%
At irr,present value of inflows=present value of outflows.

A:

21800=9,592/1.0x+9,592/1.0x^2+9,592/1.0x^3

Hence x=irr=15.28%(Approx).

B:

21800=29430/1.0x^3

Hence x=irr=10.52%(Approx).

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Answer 2

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