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What interest rate will make the NPV for the projects equal?

Matterhorn Mountain Gear is evaluating two projects with the following cash flows:

 

YearProject XProject Y
0
−$318,400

−$297,300
1
146,600

137,550
2
164,100

154,750
3
129,200

120,500

 
What interest rate will make the NPV for the projects equal?


Multiple Choice

  • 13.73%


  • .34%


  • 12.21%


  • 18.80%


  • 18.46%



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Answer #1

Solution :

YearProject XProject YDifference between Project X and Project Y
0-3,18,400-2,97,300-21,100
11,46,6001,37,5509050
21,64,1001,54,7509,350
31,29,2001,20,5008,700


IRR13.73%

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answered by: ANURANJAN SARSAM
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