Question
Better Health, Inc. is evaluating two investment projects, which require up-front expenditures of $1.0 and 1.2 million, respectively. The projects are expected to produce the
Better Health, Inc. is evaluating two investment projects, which require up-front expenditures of $1.0 and 1.2 million, respectively. The projects are expected to produce the following net cash inflows.
| Year | Project A | Project B |
| 0 | -$1,000,000 | -$1,200,000 |
| 1 | $500,000 | $800,000 |
| 2 | $400,000 | $600,000 |
| 3 | $350,000 | $300,000 |
a. What is each project's IRR?
b. What is each project's NPV if the cost of capital is 10 percent?
c. Which project is more beneficial to Better Health?
Please show your work.
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Financial Markets And Institutions
Authors: Frederic S. Mishkin, Stanley G. Eakins
7th Edition
013213683X, 978-0132136839
