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 | negative $ 52 | $ 23 | $ 20 | $ 20 | $ 15 |
| B | negative $ 102 | $ 22 | $ 38 | $ 48 | $ 60 |
a. What are the IRRs of the two projects?
b. If your discount rate is 5.1 %, what are the NPVs of the two projects?
c. Why do IRR and NPV rank the two projects differently?
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An Introduction To Real Estate Finance
Authors: Edward Glickman
1st Edition
0123786266, 9780123786265
