The IRR of projects A and B respectively are

• 54.0% and 22.5%
• 47.5% and 35.0%
  35.0% and 47.5%
• 12.2% in both cases.
• 22.5% and 54.0%

A company that uses a hurdle rate of 10% is evaluating two investment opportunities, shown in Exhibit 2, and can invest in only one of them. Project A requires an upfront investment of $200 million today and is expected to deliver $295 million in one year; project B requires an upfront investment of $400 million today and is expected to deliver $540 million in one year. Exhibit 2 (In Millions of $) Year 0 1 A -$200.0 $295.0 B -$400.0 $540.0