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Projects A and B have the cash flows shown below. Their weighted average cost of capital is 6%. Their reinvestment rate is 8%. What are
| Projects A and B have the cash flows shown below. Their weighted average cost of capital is 6%. Their reinvestment rate is 8%. What are the projects IRRs and NPVs? Which one project would you select? Why? | |||||
| 0 | 1 | 2 | 3 | 4 | |
| Project A Cash Flows = | -$1,000 | $400 | $300 | $300 | $400 |
| Project B Cash Flows = | -$1,000 | $100 | $200 | $700 | $200 |
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Intermediate Financial Management
Authors: Eugene F. Brigham, Phillip R. Daves
11th edition
978-1111530266
