IRRs of Projects Assignment | Homework For You

Suppose Canadian Space Flight Group has two mutually exclusive projects: space flight using an Airbus and space flight using a Bombardier aircraft. Project Airbus requires an initial cash outlay of $325,000 and is expected to provide after-tax cash flows of $60,000 in year 1, $80,000 in year 2, $150,000 in year 3, and $180,000 in year 4. Project Bombardier requires an initial cash outlay of $250,000 and is expected to provide after-tax cash flows of $70,000 in year 1, $100,000 in year 2, $120,000 in year 3, and $70,000 in year 4. The appropriate discount rate is 12 percent.

a)Find the IRRs of both projects.

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b)Find the crossover rate of the two projects.

C)Which project should be accepted using the information in (B)? Why? Get Finance homework help today