Figure 14-10.
Present value of $1
Present value of an Annuity of $1
-Refer to Figure 14-10. Durrel Company is considering two different modifications to its current manufacturing process. The after-tax cash flows associated with the two investments are as follows:
Durrel's cost of capital is 6%.
Required:
A. Compute the NPV for each investment and state which project should be chosen based on the NPV.
B. Compute the IRR for each investment and state which project should be chosen based on the IRR.
Definitions:
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