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NPV and IRR analysis of projectsThomas Company is considering two mutually exclusive projects. The firm,...

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Finance

NPV and IRR analysis of projectsThomas Company is considering two mutually exclusive projects. The firm, which has a cost of capital of 15%,

has estimated its cash flows as shown in the following table:

project A project B

initial investment

$110,000 $99,000

Cash Inflows

$20,000 $50,000 year 1

$20,000 $40,000 year 2

$40,000 $25,000 year 3

$45,000 $5,000 year 4

$55,000 $25,000 year 5

.

a.Calculate the NPV of each project, and assess its acceptability.

b.Calculate the IRR for each project, and assess its acceptability.

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