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JKL Industries is evaluating two projects, Project Star and Project Galaxy, each requiring an initial...

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Accounting

JKL Industries is evaluating two projects, Project Star and Project Galaxy, each requiring an initial investment of INR 150,000. The projected cash inflows are:

Year

Cash Flows (Project Star)

Cash Flows (Project Galaxy)

Initial Investment

(150,000)

(150,000)

1

50,000

40,000

2

40,000

50,000

3

30,000

40,000

4

30,000

30,000

a. Compute the Internal Rate of Return (IRR) for each project.

b. Which project should be selected if the company’s required rate of return is 7%?

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