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 $ 49$49 | $ 27$27 | $ 19$19 | $ 19$19 | $ 17$17 |
| B | negative $ 101$101 | $ 21$21 | $ 42$42 | $ 48$48 | $ 62$62 |
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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Finance Accumulation And Monetary Power
Authors: Daniel Woodley
1st Edition
0367338556, 978-0367338558
