Question
is considering Projects A and B, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision
is considering Projects A and B, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the higher IRR, how much value will be forgone? Note that under certain conditions choosing projects on the basis of the IRR will not cause any value to be lost because the one with the higher IRR will also have the higher NPV, so no value will be lost if the IRR method is used. WACC=10.00%
End of Year | ||||||||
Project | Investment | 1 | 2 | 3 | 4 | |||
A | ($2,050) | $750 | $760 | $770 | $780 | |||
A Flows | $750 | $1,510 | $2,280 | $3,060 | ||||
B Flows | $1,500 | $3,018 | $4,554 | $6,108 | ||||
B | ($4,300) | $1,500 | $1,518 | $1,536 | $1,554 | |||
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Please show work in excel, having trouble fiquring out NPV. I appreciate your help.
2) Calculate the Net Present Value, NPVA and NPVB NPV(A)- NPV (B) 3) Calculate the Internal Rate of Return, IRRA and IRRB IRR(A)- IRR(B) 4) Calculate the Profitability Index, PIA and PIA PI(A)- PI(B)Step by Step Solution
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