Question

IRR-Mutually exclusive projects Bell Manufacturing is attempting to choose the better of two mutually exclusive projects for expanding the firm's warehouse capacity. The relevant cash flows for the projects are shown in the following table: B . The firm's cost of capital is 13%. a. Calculate the IRR for each of the projects. Assess the acceptability of each project on the basis of the IRRs. b. Which project is preferred? a. The internal rate of return (IRR) of project X is %. (Round to two decimal places.) 0 Data Table (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Initial investment (CF) Year (6) Project X Project Y $500,000 $280,000 Cash inflows (CF) $100,000 $130,000 $130,000 $110,000 $170,000 $75,000 $200,000 $70,000 $260,000 $30,000 Print Done

Answer 1

J265 fx EIRR(J258:J263) Year 0 1 Project X Project Y Cashflows Cashflows(2) $ (500,000.00) $ (280,000.00) $ 100,000.00 $ 130,000.00 $ 130,000.00 $ 110,000.00 $ 170,000.00 $ 75,000.00 $ 200,000.00 $ 70,000.00 $ 260,000.00 $ 30,000.00 IRR(values) IRR values) 17.88% 18.78% 4 5 IRR IRR 266 267 268 Project Y is Acceted since it is have higher IRR

J265 Fax =IRR(J258:J263) Year CON Project X Cashflows -500000 100000 130000 170000 200000 260000 IRR(values) =IRR(1258:1263) Project Y Cashflows(2) -280000 130000 110000 75000 70000 30000 IRR values) =IRR(1258:J263) 264 IRR 265 IRR 266 267 Project Y is Acceted since it is 268