NPV versus IRR Consider the following cash flows on two mutually exclusive projects for Tomatina Recreation SA.

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NPV versus IRR Consider the following cash flows on two mutually exclusive projects for Tomatina Recreation SA. Both projects require an annual return of 15 per cent.

Year Deepwater Fishing

(€)

New Submarine Ride (€)

0 –600,000 –1,800,000 1 270,000 1,000,000 2 350,000 700,000 3 300,000 900,000

(a) Calculate the IRR for both projects. Which project should you choose?

(b) Compute the NPV for both projects. Which project should you choose?

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Fundamentals Of Corporate Finance

ISBN: 9780077178239

3rd Edition

Authors: David Hillier, Iain Clacher, Stephen A. Ross

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Question Posted: Jul 09, 2024 09:00 AM

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NPV versus IRR Consider the following cash flows on two mutually exclusive projects for Tomatina Recreation SA.

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Fundamentals Of Corporate Finance

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