Calculate the incremental IRR for the cash flows

1. Consider the following cash flows of two mutually exclusive projects for Spartan Rubber Company. Assume the discount rate for Spartan Rubber Company is 11 percent.

Year Dry Prepreg Solvent Prepreg
0 –$ 1,790,000   –$ 795,000
1   1,109,000     420,000
2   918,000     690,000
3   759,000     408,000
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a. What is the payback period for each project? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).)

Payback period
Dry Prepreg   years

Solvent Prepreg  years

________________________________________

b. What is the NPV for each project? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).)

NPV
Dry Prepreg $

Solvent Prepreg $

________________________________________

c. What is the IRR for each project? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places (e.g., 32.16).)

IRR
Dry Prepreg  %

Solvent Prepreg  %

________________________________________

d. Calculate the incremental IRR for the cash flows. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).)

Incremental IRR  %

Solution:

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