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 |
−$48 |
$26 |
$21 |
$21 |
$$13 |
B |
−$100 |
$22 |
$40 |
$51 |
$58 |
a. What are the IRRs of the two projects?
b. If your discount rate is 5.1%, what are the NPVs of the two projects?
c. Why do IRR and NPV rank the two projects differently?
calc:-
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