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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 50 |
$ 23
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Question & Answer: You are choosing between two projects. The cash flows for the projects are given in the following table ($ million):…..
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$ 20
$ 19
$ 16
| B | negative $ 99 |
$ 18
$ 40
$ 50
$ 61
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?
a. What are the IRRs of the two projects?
Expert Answer
