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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 $26 $20 $22 $15

B -$101 $18 $41 $50 $61

a. What are the IRRs of the two projects?

b. If your discount rate is 5.4 %, what are the NPVs of the two projects?

c. Why do IRR and NPV rank the two projects differently?

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