Explain decision making on the basis of the irr and npv

Reference no: EM1313547

Explain decision making on the basis of the IRR and NPV criterion

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

Compute the internal rate of return for each project.

Compute the net present value for each project if the firm has a 10% cost of capital. Which project should be adopted? Why?

Reference no: EM1313547

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