Insigne Corporation is considering two investment projects (projects A and project B) that are mutually exclusive. Project A requires an initial cash out flow of $10,000,000 today and Project B requires an initial cash out flow of $15,000,000 today. The expected end-of-year cash inflows of each project are given in the following table: YearCash Inflow project ACash Inflow project B13,500,0007,500,00026,000,0008,000,00036,000,0004,000,00049,000,0004,500,000 Weighted average cost of capital is 13% for both projects. What is the IRR of each project?What is the NPV of each project?What is MIRR of each project?What is payback of each project?Which project should Insigne Corporation take? Please explain why

We have the following data regarding outflows and inflows for the two projects:

Answered: Insigne Corporation is considering two…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 7P: Your division is considering two investment projects, each of which requires an up-front expenditure...

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Insigne Corporation is considering two investment projects (projects A and project B) that are mutually exclusive. Project A requires an initial cash out flow of $10,000,000 today and Project B requires an initial cash out flow of $15,000,000 today. The expected end-of-year cash inflows of each project are given in the following table:

Year	Cash Inflow project A	Cash Inflow project B
1	3,500,000	7,500,000
2	6,000,000	8,000,000
3	6,000,000	4,000,000
4	9,000,000	4,500,000

Weighted average cost of capital is 13% for both projects.

What is the IRR of each project?
What is the NPV of each project?
What is MIRR of each project?
What is payback of each project?

Which project should Insigne Corporation take? Please explain why

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