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 | $51 | $27 | $19 | $18 | $17 |
| B | $98 | $19 | $39 | $48 | $61 |
a. What are the IRRs of the two projects?
b. If your discount rate is 4.9%, what are the NPVs of the two projects?
c. Why do IRR and NPV rank the two projects differently?
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Essential Mathematics For Economic Analysis
Authors: Knut Sydsaeter, Peter Hammond, Arne Strom
4th Edition
0273760688, 9780273760689
