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please help me with this question 1. Your boss hands you the following cash flow estimates along with the corresponding internal rates of return and
please help me with this question
1. Your boss hands you the following cash flow estimates along with the corresponding internal rates of return and NPV estimates for a pair of mutually exclusive projects: Projects k A 10% B 10% He adds the following: Investment (t = 0) -$5,000 $10,000 C1 (t = 1) $4,000 $10,000 C2 (t =2) $4,000 $4,000 NPV $1,942.15 $2,396.69 IRR 37.98% 30.62% I know that we should choose project B based on the NPV, but I would like you to somehow "fix" the IRR calculation to make it consistent with the NPV. a. [1] What is the specific problem with the IRR in this case? b. [4] Is there anything you can do to fix the problem (without relying on NPV)? Show your calculations in detail and briefly explain your resultsStep by Step Solution
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