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 | $49 | $ 24 | $ 20 | $ 18 | $ 13 |
| B | $101 | $ 20 | $ 39 | $ 52 | $ 60 |
a. What are the IRRs of the two projects?
b. If your discount rate is
5.1 %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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Foundations In Personal Finance
Authors: Dave Ramsey
College Edition
1936948001, 978-1936948000
