irr

问题如下：

Considering ABC management’s ROIC-based investment criterion and the IRR and NPV of both projects, Soroka should recommend to:

选项：

reject both projects A and B.

invest only in Project B because it has a higher NPV.

invest only in Project A because has positive cash flow during all four years.

解释：

A is correct. ABC’s management aims to achieve a minimum ROIC above 9.20%, but the IRR of both projects fails to meet this investment criterion. Even though Project B has a positive NPV, if it were undertaken, it would reduce ROIC.

B is incorrect because even though Project B’s NPV is $1.12 million (which increases ABC’s value to shareholders), its IRR is 8.97%, which is below the target ROIC of 9.20%. Consequently, if Project B was undertaken, it would lower ABC’s ROIC.

C is incorrect because Project A’s IRR is below ABC management’s target ROIC of 9.2%. Additionally, Project A’s NPV is negative, so it decreases ABC’s shareholder value.