finance

  

. 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?