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Problem 1 Madeleine Blanger company is considering Projects A and B with the following information: 19X0 19X1 19X2 19X3 Year a. b. Cashflows Project
Problem 1 Madeleine Blanger company is considering Projects A and B with the following information: 19X0 19X1 19X2 19X3 Year a. b. Cashflows Project A $4,000 (initial investment) 800 800 4,800 Project B $4,000 (initial investment) 800 4,800 0 If Madeleine's cost of capital is 15 percent, rank the projects on the basis of the IRR criterion. Why should Madeleine not choose between the projects on the basis of the IRR ranking determinated in a ? What general conclusion can be drawn from your explanation in part b?
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Calculation of IRR of the project A1 B C D 2 Year PROJECT A PROJECT B 3 0 4000 4000 4 1 800 800 5 2 ...
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Fundamentals of Corporate Finance
Authors: Richard Brealey, Stewart Myers, Alan Marcus
8th edition
77861620, 978-0077861629
