You must choose between two mutually exclusive projects. You may choose only one project, not both. Or you may reject both. Let us consider the two projects C and D; both need a $10 million investment, each.
Project C generates $15 million in Year 1 and $10 million in Year 2.
Project D generates 0 in Year 1 and $30 million in Year 2.
Save your time - order a paper!
Get your paper written from scratch within the tight deadline. Our service is a reliable solution to all your troubles. Place an order on any task and we will take care of it. You wonât have to worry about the quality and deadlinesOrder Paper Now
You can verify that: Project C has NPV of $11.9 million at 10% discount rate and IRR of 100%.
Project D has NPV of $14.8 million and IRR of 73.2%.
a. What project do you take based on the IRR decision rule?why
b. What project do you take based on the NPV decision rule?why
c. Do you get the same decision under both rules? If not why? Which project do you ultimately decide to do?
please explain your answers in details and in simple English