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Question 4 Consider the following two cash-flow sequence: Time (Year) 0 1 Project A -80 96 Project B -80 10 2 1 10 3 5
Question 4 Consider the following two cash-flow sequence: Time (Year) 0 1 Project A -80 96 Project B -80 10 2 1 10 3 5 90 (a) Find the Internal Rate of Return (IRR) of project A and Project B. And show that IRR(A) > IRR(B). [8 marks) (b) Show that NPV(A) > NPV(B) if the interest rate is r = 0.06 or 6%. [8 marks]
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