Mary Inc. is considering mutually exclusive Projects A and B,whose cash flows are shown below. If the decision is made bychoosing the project with the higher IRR, will there be any valueloss due to the IRR-based decision? If there is a loss, how muchvalue will be forgone? The WACC is assumed to be 9.5%.
WACC: Year | 9.5% | 0 | 1 | 2 | 3 | 4 |
CFA | | ?$2,020 | $730 | $730 | $740 | $740 |
CFB | | ?$4,100 | $1,400 | $1,500 | $1,520 | $1,530 |
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