Question
The following table shows the forecast cash flows for two projects: C 0 C 1 C 2 C 3 C 4 C 5 A $1,110
The following table shows the forecast cash flows for two projects:
| C0 | C1 | C2 | C3 | C4 | C5 | |
|---|---|---|---|---|---|---|
| A | $1,110 | $31 | $31 | $31 | $31 | $1,288 |
| B | 1,110 | 84 | 83 | 1,105 |
Now suppose that the term structure is upward sloping and investors demand a higher return on the more distant flows as in the following table:
| t | |||||
| 1 | 2 | 3 | 4 | 5 | |
|---|---|---|---|---|---|
| rt | 4.0% | 4.5% | 5.0% | 5.5% | 6.0% |
a-1. Calculate the IRR on the two projects. a-2. Calculate the NPV on the two projects. a-3. Do the two measures give the same ranking for the two projects?
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Bitcoin Cash What You Need To Know About Bch
Authors: Alexander O. M.
1st Edition
1976721229, 978-1976721229
