E Click the icon to view the cash flows for the projects. More Info a) Compute the IRR for each investment. The rate of return for Project A is 19.5 %. (Round to one decimal place.) Net Cash Flow The rate of return for Project B is 27.6 %. (Round to one decimal place.) Project B - $90,000 $60,000 $50,000 Project A b) At MARR = 7%, determine the acceptability of each project. - $90,000 1 $8,500 Vould you accept Project A? Choose the correct answer below. S60,000 S70,000 $25,500 O No V Yes Vould you accept Project B? Choose the correct answer below. Print Done

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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4.

 

Consider two investments with the sequences of cash flows given in the table below.
Click the icon to view the cash flows for the projects.
More Info
(a) Compute the IRR for each investment.
The rate of return for Project A is 19.5 %. (Round to one decimal place.)
Net Cash Flow
The rate of return for Project B is 27.6 %. (Round to one decimal place.)
Project B
- $90,000
$60,000
$50,000
$25,500
Project A
- $90,000
in
(b) At MARR = 7%, determine the acceptability of each project.
1
$8,500
Would you accept Project A? Choose the correct answer below.
2
$60,000
3
$70,000
No
V Yes
Would you accept Project B? Choose the correct answer below.
Print
Done
Yes
No
(c) If A and B are mutually exclusive projects, which project would you select on the basis of the rate of return on incremental investment?
The rate of return on the incremental investment is %. (Round to one decimal place.)
Transcribed Image Text:Consider two investments with the sequences of cash flows given in the table below. Click the icon to view the cash flows for the projects. More Info (a) Compute the IRR for each investment. The rate of return for Project A is 19.5 %. (Round to one decimal place.) Net Cash Flow The rate of return for Project B is 27.6 %. (Round to one decimal place.) Project B - $90,000 $60,000 $50,000 $25,500 Project A - $90,000 in (b) At MARR = 7%, determine the acceptability of each project. 1 $8,500 Would you accept Project A? Choose the correct answer below. 2 $60,000 3 $70,000 No V Yes Would you accept Project B? Choose the correct answer below. Print Done Yes No (c) If A and B are mutually exclusive projects, which project would you select on the basis of the rate of return on incremental investment? The rate of return on the incremental investment is %. (Round to one decimal place.)
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