Garage, Inc., has identified the following two mutually exclusive projects: What

Question

Garage, Inc., has identified the following two mutually exclusive projects:

What is the IRR for each of these projects?

Project A: 17.84%

Project B: 17%

If the required return is 12 percent, what is the NPV for each of these projects?

NPV Project A: $3,042.70

NPV Project B: $3,789.83

At what discount rate would the company be indifferent between these two projects? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Discount rate %: ?

Year Cash Flow A Cash Flow B 0 -$28,700 -$28,700 1 $14,100 $4,150 2 $12,000 $9,650 3 $9,050 $14,900 4 $4,950 $16,500

Explanation / Answer

IRR project A = 17.85%

project B = 17.01%

NPV project A = 3043.038

project B = 3789.852

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