a) Calcalute each project\'s PW. b) Determine the IRR of each project. c) Which
ID: 1162616 • Letter: A
Question
a) Calcalute each project's PW.
b) Determine the IRR of each project.
c) Which project would you recommened?
d) Why might one project have the highest PW while a different project has the largest? IRR? Choose the correct answer below.
A.This is because the IRR method assumes reinvestment of cash flows at the MARR whereas the PW method assumes reinvestment at the IRR.
B.This is because the IRR method assumes reinvestment of cash flows at the IRR whereas the PW method assumes reinvestment at the MARR.
C.This is because the IRR method assumes reinvestment of cash flows at the IRR and the PW method assumes reinvestment at the IRR too.
D.This is because the IRR method assumes reinvestment of cash flows at the MARR and the PW method assumes reinvestment at the MARR too.
Consider the three mutually exclusive projects that follow. The firm's MARR is 10% per year EOY Project 1Project 2 Project 3 $10,500- $5,371.13 $4,484.09 $4,896.58 -$8,500$10,000 1-3 Click the icon to view the interest and annuity table for discrete compounding when i: 10% per year.Explanation / Answer
a) Use NPV(0.1, cashflow from year 1 to 3)+cashflow of year 0 in excel
b) Use IRR function
c) It is always better to select based on PW as it is easy to understand
d) Option B, PW tries to satisfy the MARR whereas IRR reinvests at IRR rate
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.