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Browns Industries is considering a project requiring an initial investment of $200,000 followed by annual cash inflows of $45,000 for the next six years.A second
Browns Industries is considering a project requiring an initial investment of $200,000 followed by annual cash inflows of $45,000 for the next six years.A second six-year project has an initial outlay of $325,000.
a. How much would the second project have to generate in annual cash flows to have the same IRR as the first?
b. If Browns cost of capital is 8%, how much would the second project have to generate in annual cash flows to have the same NPV as the first project.
Explain your answers.
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