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Category > Business & Finance Posted 15 Jul 2017 My Price 8.00

As the Chief Financial Officer of the Orient Express,

As the Chief Financial Officer of the Orient Express, you are offered the following two mutually exclusive projects.

Year

Project A

Project B

0

-$5,000

-$100,000

1

3,500

65,000

2

3,500

65,000

a. What are the IRRs of these two projects?

b. If you are told only the IRRs of the projects, which would you choose?

c. What did you ignore when you made your choice in part (b)?

d. How can the problem be remedied?

e. Compute the incremental IRR for the projects.

f. Based on your answer to part (e), which project should you choose?

 

g. Suppose you have determined that the appropriate discount rate for these projects is 15 percent. According to the NPV rule, which of these two projects should be adopted?

Answers

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Status NEW Posted 15 Jul 2017 10:07 AM My Price 8.00

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