Question
You are choosing between two projects. The cash flows for the projects are given in the following table ($ million): Project Year 0 Year 1
You are choosing between two projects. The cash flows for the projects are given in the following table ($ million):
| Project | Year 0 | Year 1 | Year 2 | Year 3 | Year 4 |
| A | $52 | $25 | $20 | $21 | $16 |
| B | $99 | $18 | $39 | $50 | $61 |
a. What are the IRRs of the two projects?
b. If your discount rate is 5.3%, what are the NPVs of the two projects?
c. Why do IRR and NPV rank the two projects differently?
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Finance At Work
Authors: Valérie Boussard
1st Edition
113820403X, 978-1138204034
