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Investments and IRR(s) Project Initial Investment IRR Null $0 0.0% A $600,000 44.0% В $800,000 40.0% C $470,000 39.2% D $540,000 36.0% Incremental IRR(s) Increment Incremental IRR В-А 28.3% В-D 48.8% В-С 41.4% A-D 116.5% А-С 61.0% D-C 18.4%

Investments and IRR(s) Project Initial Investment IRR Null $0 0.0% A $600,000 44.0% В $800,000 40.0% C $470,000 39.2% D $540,000 36.0% Incremental IRR(s) Increment Incremental IRR В-А 28.3% В-D 48.8% В-С 41.4% A-D 116.5% А-С 61.0% D-C 18.4%

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
Problem 1PS
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ZeeZee’s Construction Company has the opportunity to select one of four projects (A, B, C, or D) or the null (Do Nothing) alternative. Each project requires a single initial investment and has an internal rate of return as shown in the first table below. The second table shows the incremental IRR(s) for pairwise comparisons between each project and all other projects with a smaller initial investment. For each of the values of MARR below indicate which project is preferred based on an incremental IRR analysis. a. MARR = 50%. b. MARR = 41%. c. MARR = 25%.

Investments and IRR(s) Project Initial Investment IRR Null $0 0.0% A $600,000 44.0% В $800,000 40.0% C $470,000 39.2% D $540,000 36.0%
Transcribed Image Text:Investments and IRR(s) Project Initial Investment IRR Null $0 0.0% A $600,000 44.0% В $800,000 40.0% C $470,000 39.2% D $540,000 36.0%
Incremental IRR(s) Increment Incremental IRR В-А 28.3% В-D 48.8% В-С 41.4% A-D 116.5% А-С 61.0% D-C 18.4%
Transcribed Image Text:Incremental IRR(s) Increment Incremental IRR В-А 28.3% В-D 48.8% В-С 41.4% A-D 116.5% А-С 61.0% D-C 18.4%
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