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Solli is considering two projects, A & B. Cash flows are shown below. The opportunity cost of capital for A is 14.0% and for B
Solli is considering two projects, A & B. Cash flows are shown below. The opportunity cost of capital for A is 14.0% and for B is 10.0%.
| Period | CF (A) | CF (B) |
| 0 | -$50,000 | -$100,000 |
| 1 | $20,000 | $60,000 |
| 2 | $20,000 | $25,000 |
| 3 | $20,000 | $25,000 |
| 4 | $20,000 | $25,000 |
| a. Calculate the NPV for each project. A and B | |||
| b. Calculate IRR for project A and B | |||
| c. Which project should be selected? | |||
| d. Rationale behind selection | |||
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