Question
Carolina Company is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and are not repeatable.
Carolina Company is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and are not repeatable.
WACC: 7.75%
Year01234
CFS $1,050$675$650
CFL $1,050$360$360$360 $360
If the decision is made by choosing the project with the higher IRR, how much value will be forgone?
What is the underlying cause of ranking conflicts between NPV and IRR?
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The Handbook Of Energy Trading
Authors: Stefano Fiorenzani, Samuele Ravelli, Enrico Edoli
1st Edition
1119953693, 978-1119953692
