Question
Consider the following two mutually exclusive projects:
Consider the following two mutually exclusive projects:
Cash Flows ($ millions)
Project C0 C1 C2 C3
A –200 +110 +120 0
B –200 0 0 +250
A. Calculate IRR for A, IRR for B, and the cross-over rate of the two projects.
B. What is the range of the discount rate (to calculate NPV) that A should be chosen; and what is the range of the discount rate that B should be chosen? (Note: show your work and describe how you determined the ranges)
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Answer #1
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