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5) You are choosing between two projects, but can only take one. The cash flows for the projects are given in the following table: 0
5) You are choosing between two projects, but can only take one. The cash flows for the projects are given in the following table:
0 | 1 | 2 | 3 | 4 | |
A | -50 | 25 | 20 | 20 | 15 |
B | -100 | 20 | 40 | 50 | 60 |
a. What are the IRRs of the two projects? Use an excel spread sheet
b. If your discount rate is 5%, what are the NPVs of the two projects?
c. Why do IRR and NPV rank the two projects differently?
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