. Two mutually exclusive projects have projected cash flows as follows: YEAR PROJECT A PROJECT B 0 Ksh.
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. Two mutually exclusive projects have projected cash flows as follows:
YEAR
PROJECT A
PROJECT B
0
Ksh. -2m
Ksh. -2m
1
1m
0
2
1m
0
3
1m
0
4
1m
6m
Required:
a) Determine the internal rate of return for each project. [2 Marks]
b) Determine the net present value for each project at discount rates of 0, 5,10,20,30, and 35 percent. [2 Marks]
c) Plot a graph of the net present value of each project at the different discount rates. [2 Marks]
d) Which project would you choose? Why? [ 2 Marks]
e) What is each project’s MIRR if the cost of capital is 12 percent?
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