Question
You are considering the following two projects and can take only one. Your cost of capital is 10.5%. The cash flows for the two
You are considering the following two projects and can take only one. Your cost of capital is 10.5%. The cash flows for the two projects are as follows ($ million): Project A B a. What is the IRR of each project? b. What is the NPV of each project at your cost of capital? Year 0 - $99 -$99 c. At what cost of capital are you indifferent between the two projects? d. What should you do? Year 1 $22 $48 Year 2 $31 $41 Year 3 Year 4 $41 $48 $31 $19
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Fundamentals of Corporate Finance
Authors: Berk, DeMarzo, Harford
2nd edition
132148234, 978-0132148238
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