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 | $21 | $18 | $16 |
| B | $102 | $21 | $39 | $52 | $59 |
a) What are the IRRs of the two projects? %
b. If your discount rate is 5.2%, what are the NPVs of the two projects?
c. Why do IRR and NPV rank the two projects differently?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Public Finance In Democratic Process Fiscal Institutions And Individual Choice
Authors: James M. Buchanan
1st Edition
0865972192, 978-0865972193
