You are choosing between two projects. The cash flows for the projects are given in the following table ($ million):

Question

Question

Project

Year 0

Year 1

Year 2

Year 3

Year 4

A

B

a. What are the IRRs of the two projects?

b. If your discount rate is

,

what are the

NPVs

of the two projects?

c. Why do IRR and NPV rank the two projects differently?

-Finance310

Answer 1

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