E12-30A (similar to) | Question Help |
McKnight Products is trying to decide which of the following projects to invest in:• Project A costs $260,000 and offers seven annual net cash inflows of $62,000. • Project B costs $385,000 and offers ten annual net cash inflows of $66,000.Compute the IRR of each project and use this information to identify the better investment. LOADING…(Click the icon to view the present value annuity table.) LOADING…(Click the icon to view the present value table.)LOADING…(Click the icon to view the future value annuity table.) LOADING…(Click the icon to view the future value table.)Review OnlyLOADING…Click the icon to see the Worked Solution.First, compute the IRR of each project. The IRR for Project A is between 14% and 16%.The IRR for Project B is between 10% and 12%.Project A is better because the IRR is higher.
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