Question
You are choosing between two projects. The cash flows for the projects are given in the following table: Project Year 0. Year 1. Year 2.
You are choosing between two projects. The cash flows for the projects are given in the following table:
Project Year 0. Year 1. Year 2. Year 3. Year 4
A. -$51. $24. $21. $18. $16
B -$101. $20. $38. $50. $58
a. What are the IRRs of the two projects? A____%. B____%
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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Cases in Finance
Authors: Jim DeMello
3rd edition
1259330476, 1259330478, 9781259352652 , 978-1259330476
