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Question: You are choosing between two projects, but can only take one. The cash flows for the project are ...
You are choosing between two projects, but can only take one. The cash flows for the project are given in the following table:
| 0 | 1 | 2 | 3 | 4 | |
| A | -$49 | $24 | $22 | $19 | $12 |
| B | -$98 | $21 | $42 | $49 | $59 |
a. What are the IRRs of the two projects?
b. If your discount rate is 5.2%, what are the NPVs of the two projects?
c. Why do IRR and NPV rank the two projects differently?
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The Finance Book
Authors: Stuart Warner, Si Hussain
2nd Edition
1292401982, 978-1292401980
