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# Suppose a company is considering two independent projects, Project A and Project B. The cash outlay for Project A is \$14,000. The cash outlay for...

Suppose a company is considering two independent projects, Project A and Project B. The cash outlay for Project A is \$14,000. The cash outlay for Project B is \$20,000. The company’s cost of capital is 12%. The following table shows the after-tax cash flows. For each project, compute the NPV, the IRR, the MIRR, and indicate the accept/reject decision.
Year Project A Project B
1 \$4800 \$6700
2 \$4800 \$6700
3 \$4800 \$6700
4 \$4800 \$6700

SOLUTION:
Year
0
1
2
3
4
Net Present Value
Internal Rate of Return
Modified Internal Rate of Return Project A Project B \$(14,000.00)
\$4,800.00
\$4,800.00
\$4,800.00
\$4,800.00 \$(20,000.00)
\$6,700.00...

## This question was asked on Aug 15, 2012 and answered on Aug 17, 2012.

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