A company is analyzing two mutually exclusive projects, S and L, with the following cash flows: 0 1 % 2 3 4 -$1,000 $884.88 $260 $10 Project S Project L -$1,000 $0 $260 $380 $788.16 The company's WACC is 8.5%. What is the IRR of the better project? (Hint: The better project may or may not be the one with the higher IRR.) Round your answer to two decimal places.

Essentials Of Investments
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Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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A company is analyzing two mutually exclusive projects, S and L, with the following cash flows:
Project S
Project L
0
%
1
2
3
4
H
$10
$788.16
-$1,000 $884.88 $260
$5
-$1,000 $0
$260
$380
The company's WACC is 8.5%. What is the IRR of the better project? (Hint: The better project may or may not be the one with the higher IRR.) Round your answer to two decimal places.
Transcribed Image Text:A company is analyzing two mutually exclusive projects, S and L, with the following cash flows: Project S Project L 0 % 1 2 3 4 H $10 $788.16 -$1,000 $884.88 $260 $5 -$1,000 $0 $260 $380 The company's WACC is 8.5%. What is the IRR of the better project? (Hint: The better project may or may not be the one with the higher IRR.) Round your answer to two decimal places.
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