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 | $20 | $16 |
| B | -$98 | $20 | $42 | $50 | $62 |
a. What are the IRRs of the two projects?
b. If your discount rate is
5.3 %what are the NPVsof the two projects?
c. Why do IRR and NPV rank the two projects differently?
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Behavioral Finance
Authors: Edwin Burton, Sunit N. Shah
1st Edition
111830019X, 978-1118300190
