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Please help with Net Present Value and the IRR Rule Thanks for the help! 2. NPV and IRR methods Aa Aa Ford Industries is evaluating
Please help with Net Present Value and the IRR Rule
Thanks for the help!
2. NPV and IRR methods Aa Aa Ford Industries is evaluating two mutually exclusive projects with the following net cash flows: Project A -$2,000 $300 $500 800 ,200 Project B $2,000 $1,000 $800 $500 $200 Ford's discount rate is 10.3%, and both projects have the same risk as the firm's average project. Calculate each project's net present value (NPV) NPVA Ford's CFO has instructed managers to use the IRR rule when choosing between mutually exclusive projects. If managers choose the project with the highest IRR, how much value will be st? (Hint: If the project with the highest IRR also has the highest NPV, then no value is lost, because the firm selects the project that adds the most value. Otherwise, the difference between the two projects' NPVs is the value lost from using the IRR rule instead of the NPV rule.) O $51.98 $17.95 O $38.87 $56.45 O $0.00Step by Step Solution
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