Question
Consider the following two mutually exclusive projects: Cash Flows ($thousands) Project C 0 C 1 C 2 C 3 A -9,000 6,000 6,500 4,000 0
Consider the following two mutually exclusive projects:
| Cash Flows ($thousands) | |||||
| Project | C0 | C1 | C2 | C3 |
|
| A | -9,000 | 6,000 | 6,500 | 4,000 | 0 |
| B | -9,000 | 1,300 In perpetuity |
| ||
Question: What is the IRR for project B?
Note: This project is a perpetuity with initial investment = -9,000, and it generates equal cash flows of 1,300 in perpetuity.
Multiple Choice
a.16.7%
b.14.4%
c.15.7%
d.17.8%
e.10.7%
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The Handbook Of Financial Modeling
Authors: Jack Avon
1st Edition
1430262052, 978-1430262053
