Question
1112. (Related to Checkpoint 11.1 on page 335 and Checkpoint 11.4 on page 344) (IRR and NPV calculation) The cash flows for three independent projects
1112. (Related to Checkpoint 11.1 on page 335 and Checkpoint 11.4 on page 344) (IRR and
NPV calculation) The cash flows for three independent projects are as follows:
Project A Project B Project C
Year 0 (Initial investment) $(50,000) $(100,000) $(450,000)
Year 1 $ 10,000 $ 25,000 $ 200,000
Year 2 15,000 25,000 200,000
Year 3 20,000 25,000 200,000
Year 4 25,000 25,000
Year 5 30,000 25,000
a. Calculate the IRR for each of the projects.
b. If the discount rate for all three projects is 10 percent, which project or projects
would you want to undertake?
c. What is the net present value of each of the projects where the appropriate discount
rate is 10 percent? 20 percent?
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