14. IRR rule (S5.3) Plot the NPVs for the following projects for discount rates from 0% to...
Question:
14. IRR rule (S5.3) Plot the NPVs for the following projects for discount rates from 0% to 30%:
Project C0 C1 C2 A –100 20 100 B –1,000 2,260 –1,270 C 100 –50 –80 D –1,080 2,510 –1,500
a. Which one of these projects has no IRR?
b. One of the projects has two IRRs. Which is this project and what are the IRRs?
c. What are the IRRs of the other two projects?
Chapter 5 Net Present Value and Other Investment Criteria 143
d. Suppose projects A and C are mutually exclusive. If the cost of capital is 6%, which one would you accept?
e. If the cost of capital is very high, would you accept project C? Why or why not?
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Related Book For
Principles Of Corporate Finance
ISBN: 9781264080946
14th Edition
Authors: Richard Brealey, Stewart Myers, Franklin Allen, Alex Edmans
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