A firm with a cost of capital of 15% is evaluating two
independent projects utilizing the internal rate of return
technique. Project X has an initial investment of $80,000 and cash
inflows at the end of each of the next five years of $25,000.
Project Z has an initial investment of $120,000 and cash inflows at
the end of each of the next four years of $40,000. The firm should
________.
Select one:
a. accept Project Z because its IRR is higher than Project
X
b. accept Project X and reject project Z
c. reject both the projects because they have negative
IRR
d. accept both the projects because they have equal IRR