Kerron Company is presented with the following two mutually exclusive projects.

Question

Kerron Company is presented with the following two mutually exclusive projects. The required return for both projects is 17 percent. Project M -$138,000 64,700 82,700 73,700 59,700 Project N -$367,000 146,500 192,000 131,500 122,000 2 4 Required (a) What is the IRR for each project? (Do not round intermediate calculations. Enter your answers as a percentage rounded to 2 decimal places (e.g., 32.16).) IRR Project M Project N (b) What is the NPV for each project? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).) NPV Project M Project N (c) Which, if either, of the projects should the company accept? (Click to select)

Explanation / Answer

IRR of M = 36.48%

NPV of M = 55,587.63

IRR of N = 23.46%

NPV = 45,682.31

choose M

17.00% Cash flows Year Discounted CF        (138,000.00) 0 -138000.00            64,700.00 1 55299.15            82,700.00 2 60413.47            73,700.00 3 46016.11            59,700.00 4 31858.91

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