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 | $27 | $21 | $21 | $14 |
| B | negative $ 98 | $19 | $39 | $51 | $58 |
a. What are the IRRs of the two projects?
a. What are the IRRs of the two projects?
b. If your discount rate is 4.6%,what are the NPVs of the two projects?
c. Why do IRR and NPV rank the two projects differently?
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Handbook Of Financial Econometrics
Authors: Yacine Ait-Sahalia, Lars Peter Hansen
1st Edition
044450897X, 978-0444508973
