Garage, Inc., has identified the following two mutually exclusive projects:
|Year||Cash Flow(A)||Cash Flow(B)|
a. What is the IRR for each of these projects?
Using the IRR decision rule, which project should the company accept? Is this decision necessarily correct?
b. If the required return is 11 percent, what is the NPV for each of these projects?
Which project will the company choose if it applies the NPV decision rule?