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EFG Corp. has two investment options. Both projects require an initial investment of $75,000. The...

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Accounting

  1. EFG Corp. has two investment options. Both projects require an initial investment of $75,000. The expected cash flows are as follows:

Year

Project 1 (USD)

Project 2 (USD)

0

(75,000)

(75,000)

1

25,000

20,000

2

30,000

25,000

3

35,000

30,000

4

40,000

35,000

5

45,000

40,000

Requirements: a. Calculate the IRR for both projects. b. Compute the payback period for both projects. c. Based on IRR, which project should EFG Corp. invest in and why?

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