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A company is er alyzing two mutually exclusive projects, S and L, with the following cash flows: 0 1 4 Project $857.92 $260 $15 $15 S $1,000 Project $5 $260 $400 $763.09 L $1,000 The company's WACC is 8.5%. What is the IRR of the better project? (Hint: The better project may or may not be the one with the higher IRR.) Round your answer to two decimal places.

A company is er alyzing two mutually exclusive projects, S and L, with the following cash flows: 0 1 4 Project $857.92 $260 $15 $15 S $1,000 Project $5 $260 $400 $763.09 L $1,000 The company's WACC is 8.5%. What is the IRR of the better project? (Hint: The better project may or may not be the one with the higher IRR.) Round your answer to two decimal places.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Please note that 1000 is -1000 for both.

### Project Analysis: Mutually Exclusive Projects S and L A company is analyzing two mutually exclusive projects, S and L, with the following cash flows: #### Cash Flow Timeline | Time | Project S Cash Flow | Project L Cash Flow | |------|----------------------|---------------------| | 0 | -$1,000 | -$1,000 | | 1 | $857.92 | $5 | | 2 | $260 | $260 | | 3 | $15 | $400 | | 4 | $15 | $763.09 | The company's Weighted Average Cost of Capital (WACC) is 8.5%. #### Calculation Task **Question:** What is the Internal Rate of Return (IRR) of the better project? (Hint: The better project may or may not be the one with the higher IRR.) Round your answer to two decimal places. **Answer Input:** - IRR: [ ]% Use this data and input field to solve the given financial analysis problem, and determine which project (S or L) has a better return given the provided WACC.
Transcribed Image Text:### Project Analysis: Mutually Exclusive Projects S and L A company is analyzing two mutually exclusive projects, S and L, with the following cash flows: #### Cash Flow Timeline | Time | Project S Cash Flow | Project L Cash Flow | |------|----------------------|---------------------| | 0 | -$1,000 | -$1,000 | | 1 | $857.92 | $5 | | 2 | $260 | $260 | | 3 | $15 | $400 | | 4 | $15 | $763.09 | The company's Weighted Average Cost of Capital (WACC) is 8.5%. #### Calculation Task **Question:** What is the Internal Rate of Return (IRR) of the better project? (Hint: The better project may or may not be the one with the higher IRR.) Round your answer to two decimal places. **Answer Input:** - IRR: [ ]% Use this data and input field to solve the given financial analysis problem, and determine which project (S or L) has a better return given the provided WACC.
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