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Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 –$244,500...

Consider the following two mutually exclusive projects:
Year Cash Flow (A) Cash Flow (B)
0 –$244,500 –$14,607
1 29,800 4,237
2 59,000 8,285
3 55,000 13,203
4 410,000 8,788
Whichever project you choose, if any, you require a 6 percent return on your investment.
What is the IRR for Project A?
  
What is the IRR for Project B?
  
What is the profitability index for Project A?
  
What is the profitability index for Project B?
  
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Answer #1

Accept project A as it will result in more cash flows than project B.

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