A Company Is Considering Two Mutually Exclusive Projects, a and B

question 22

Multiple Choice

A company is considering two mutually exclusive projects, A and B. Project A requires an initial investment of $200, followed by cash flows of $185, $40, and $15. Project B requires an initial investment of $200, followed by cash flows of $0, $50, and $230. What is the IRR of the project that is best for the company's shareholders? The firm's cost of capital is 10 percent.

• A) 15.45 percent
• B) 15.12 percent
• C) 13.57 percent
• D) 12.71 percent

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