### Computation of irr and npv of the project

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Computation of IRR and NPV of the project and decision making

Two mutually exclusive investment projects have the following forecasted cash flows:

Year A B
0 \$ -20,000 \$ -20,000
1 10,000 0
2 10,000 0
3 10,000 0
4 10,000 60,000

a. Compute the internal rate of return for each project.

b. Compute the net present value for each project if the firm has a 10 percent cost of capital.

c. Which project should be adopted? Why?

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