Question
Consider two mutually exclusive projects of the same risk: Project A yr0 = -11,000; yr1 = 7,000; yr2 = 4,500; yr3 = 4,500 Project B
Consider two mutually exclusive projects of the same risk:
Project A
yr0 = -11,000; yr1 = 7,000; yr2 = 4,500; yr3 = 4,500
Project B
yr0 = -11,000,000; yr1 = 7,000,000; yr2 = 3,500,000; yr3 = 3,500,000
If the firm requires a return of 12%, what project should they select based on the IRR criterion? Is there any problem with this conclusion?
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Financial Statement Analysis
Authors: Martin S. Fridson, Fernando Alvarez
5th Edition
1119457149, 978-1119457145
