You are deciding between two mutually exclusive investment opportunities. Both require the same initial investment of $10.0 million. Investment A will generate $2.00 million per year (starting at the end of the first year) in perpetuity. Investment B will generate $1.50 million at the end of the first year, and its revenues will grow at 2.0% per year for every year after that. Which investment has the higher IRR? Which investment has the higher NPV when the cost of capital is 7.0%? In this case, when does picking the higher IRR give the correct answer as to which investment is the best opportunity? You are choosing between two projects. The cash flows for the projects are given in the following table ($ million): Project A B Year 0 - $49 - $102 Year 1 $26 $19 Year 2 $21 $39 Year 3 $19 $51 Year 4 $16 $60 What are the IRRs of the two projects? If your discount rate is 4.6%, what are the NPVs of the two projects? Why do IRR and NPV rank the two projects differently