Question
Given below are the NPV of crop A and crop B calculated with different discount rates. Discount Rate 20% 21% 22% 23% 24% Crop A
Given below are the NPV of crop A and crop B calculated with different discount rates.
| Discount Rate | 20% | 21% | 22% | 23% | 24% |
| Crop A | 3.94 | 2.21 | 0.52 | -1.11 | -2.71 |
| Crop B | 4.66 | 3.21 | 1.81 | 0.45 | -0.87 |
You don't need to calculate IRR to answer the following three questions.
7. The IRR of growing crop A must be within the range of . (Hint: Based on the table above, find the lower and upper bounds that contain the IRR. Answer the question by indicating the range, for example, 21-22%.)
8. The IRR of growing crop B must be within the range of . (Hint: Same as for part 7.)
9. Based on the IRR rule, Tropical Plantation should grow crop . (Answer A or B.)
Step by Step Solution
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To find the range within which the Internal Rate of Return IRR of growing crop A and crop B must lie ...
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An Introduction To Statistical Methods And Data Analysis
Authors: R. Lyman Ott, Micheal T. Longnecker
7th Edition
1305269470, 978-1305465527, 1305465520, 978-1305269477
