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Bronco, Inc
Bronco, Inc. has identified two projects project, but can only perform 1 of them. The cash flows for the two projects are below. What is the IRR for each project? If the required rate of return is 12%, what is the NPV for each project? Given a 12% hurdle rate for IRR, what project should the firm go ahead with considering both IRR and NPV?
|
|
A |
B |
|
Year 0 |
($43,500) |
($43,500) |
|
Year 1 |
$21,500 |
$6,600 |
|
Year 2 |
$18,600 |
$14,900 |
|
Year 3 |
$13,700 |
$22,500 |
|
Year 4 |
$7,600 |
$25,200 |
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