69. Two mutually exclusive projects have the following cash flows (€) and internal rates of return (IRR): Project IRR Year 0 Year 1 Year 2 Year 3 Year 4 A 27.97% -2,450 345 849 635 3,645 B 28.37% -2,450 345 849 1,051 3,175 Assuming a discount rate of 8% annually for both projects, the firm should most likely accept: A. both projects. B. Project A only. C. Project B only.

QUESTIONS 69 THROUGH 78 RELATE TO CORPORATE FINANCE

MOCK AND SAMPLE EXAMS CFA LEVEL I MOCK EXAM MORNING 2013

69. Two mutually exclusive projects have the following cash flows (€) and internal rates of return (IRR):

Project

IRR

Year 0

Year 1

Year 2

Year 3

Year 4

27.97%

-2,450

345

849

635

3,645

28.37%

-2,450

345

849

1,051

3,175

Assuming a discount rate of 8% annually for both projects, the firm should most likely accept:

both projects.

Project A only.

Project B only.