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 | $48 | $23 | $18 | $21 | $12 |
| B | $100 | $21 | $41 | $50 | $59 |
a. What are the IRRs of the two projects?
b. If your discount rate is 4.5%, what are the NPVs of the two projects?
c. Why do IRR and NPV rank the two projects differently?
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Foundations of Financial Management
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
10th Canadian edition
1259261018, 1259261015, 978-1259024979
