Bell Manufacturing is attempting to choose the better of two mutually exclusive projects for expanding the firm’s wareho
Posted: Sun May 29, 2022 6:27 pm
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. The firm’s cost of capital is 15%.
Project X ($)
Project Y ($)
Initial Investment
500,000
325,000
Cash Flows
Year
Project X ($)
Project Y ($)
1
100,000
140,000
2
120,000
120,000
3
150,000
95,000
4
190,000
70,000
5
250,000
50,000
1. Develop equation to calculate Internal Rate of Return for
each project.
2. Calculate the Internal Rate of Return for each projects using
IRR calculator included on the learning module.
3. Which project, on this basis ,is preferred?
Show calculations for understanding and for LIKE.
mutually exclusive projects for expanding the firm’s warehouse
capacity. The relevant cash flows for the projects are shown in the
following table. The firm’s cost of capital is 15%.
Project X ($)
Project Y ($)
Initial Investment
500,000
325,000
Cash Flows
Year
Project X ($)
Project Y ($)
1
100,000
140,000
2
120,000
120,000
3
150,000
95,000
4
190,000
70,000
5
250,000
50,000
1. Develop equation to calculate Internal Rate of Return for
each project.
2. Calculate the Internal Rate of Return for each projects using
IRR calculator included on the learning module.
3. Which project, on this basis ,is preferred?
Show calculations for understanding and for LIKE.