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 negative $ 48 $ 26 $ 22 $ 20 $ 12 B negative $ 100 $ 19 $ 42 $ 49 $ 59 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? a. What are the IRRs of the two? projects? The IRR for project A is nothing?%. ?(Round to one decimal? place.) The IRR for project B is nothing?%. ? (Round to one decimal? place.) b. If your discount rate is 5.3 %?, what are the NPVs of the two? projects? If your discount rate is 5.3 %?, the NPV for project A is ?$ nothing million. ?(Round to two decimal? places.) If your discount rate is 5.3 %?, the NPV for project B is ?$ nothing million. ?(Round to two decimal? places.) c. Why do IRR and NPV rank the two projects? differently? ? (Select from the? drop-down menus.) NPV and IRR rank the two projects differently because they are measuring different things. ? NPV IRR is measuring value? creation, while ? NPV IRR is measuring return on investment. Because returns do not scale with different levels of? investment, the two measures may give different rankings when the initial investments are different.

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