Question
Consider the two cash flow streams below: Period 0 1 2 Option Y 1000 -750 -750 Option Z -1000 700 700 Calculate IRR for each
Consider the two cash flow streams below:
| Period | 0 | 1 | 2 |
| Option Y | 1000 | -750 | -750 |
| Option Z | -1000 | 700 | 700 |
Calculate IRR for each option? Which project has the higher NPV if required return is 10%?
Answer Given:
IRR: Option Y 31.87% vs. Option Z 25.69%
NPV: Option Z $214.88 vs. Option Y $-301.65
Please show how the answer was calculated.
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Mathematics Of Finance
Authors: Petr Zima, Robert L. Brown
5th Edition
0070871353, 978-0070871359
