Question
You are choosing between two projects. The cash flows for the projects are given in the following table ($million): Project Year 0 Year 1 Year
You are choosing between two projects. The cash flows for the projects are given in the following table ($million):
Project Year 0 Year 1 Year 2 Year 3 Year 4
A -$48 $24 $20 $21 $15
B -$101 $20 $40 $51 $60
A. What are the IRRs of the two projects?
B. If your discount rate is 5.1%, what are the NPV's of the two projects?
C. Why do IRR and NPV rank the two projects differently?
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Fundamentals of Financial Management
Authors: Eugene F. Brigham
Concise 9th Edition
1305635937, 1305635930, 978-1305635937
