Consider the following investment projects. Assume that MARR = 15%. n Project 1 Project 2 Project 3 Year 0 - $1,000 - $5,000 - $2,000 Year 1 $500 $7,500 $1,500 Year 2 $2,500 $600 $2,000 (a - c) Compute the IRR for each project, (d) If the three projects are mutually exclusive investments, which project should be selected according to the IRR criterion?

Question

11 September, 10:16

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Elliott Stafford · Answer 1

Answer and Explanation:

For project A 1000=500 / (1+r) + 2500 / (1+r) ^2

r=.85 = 85%

for B r=57.5%

for C r = 44.2%

preference

A>B>C