Consider the following cash flows of two mutually exclusive projects for Tokyo R

Question

Consider the following cash flows of two mutually exclusive projects for Tokyo Rubber Company. Assume the discount rate for Tokyo Rubber Company is 17 percent.

Year Dry Prepreg Solvent Prepreg
0 $ -1,480,000 $ -582,000
1 918,000 318,000
2 818,000 518,000
3 718,000 418,000



Requirement 1:
(a)

Calculate the NPV for each project. Round your answers to 2 decimal places. (e.g., 32.16))

NPV
Dry Prepreg $
Solvent Prepreg $





Requirement 2:
(a)

Calculate the IRR for each project. Round your answers to 2 decimal places. (e.g., 32.16))

IRR
Dry Prepreg %
Solvent Prepreg %





Requirement 3:
(a) Calculate the incremental IRR. Round your answer to 2 decimal places. (e.g., 32.16))

Incremental IRR %

Explanation / Answer

NPV Dry Prepreg = $ 350,473.5 Solvent Prepreg = 329,187.8$ IRR Dry Prepreg = 31.8514% Solvent Prepreg= 47.7654% Incremental cash flows -898,000 600,000 300,000 300,000 Incremental IRR = 18.6819%

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