Homework Answers
Pls see the table below.
| A | B | C | |
| 0 | -9500 | -6000 | -29950 |
| 1 | 11500 | 1250 | 5900 |
| 2 | 11500 | 1490 | 6000 |
| 3 | 11500 | 1490 | 6100 |
| 4 | 11500 | 1490 | 6200 |
| 5 | 11500 | 1490 | 6300 |
| 6 | 11500 | 1490 | 6400 |
| NPV | 29584 | -495 | -5937 |
| (NPV(0.15, Cash Flow range) | |||
| IRR | 120% | 11% | 6% |
| (IRR(Cash Flow range, guess) | |||
a) NPV for the three projects using 15% discount rate would be 29584, -495 and -5937 respectively
b) IRR for the three projects is 120%, 11% and 6% respectively
c) Clearly project A should be chosen since it gives the highest NPV and IRR
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