Question

In: Finance

You are choosing between two projects. The cash flows for the projects are given in the...

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

−$52

$27

$19

$22

$17

B

−$100

$22

$41

$48

$61

a. What are the IRRs of the two​ projects?

b. If your discount rate is 5.4%​, what are the NPVs of the two​ projects?

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

Solutions

Expert Solution

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

You are choosing between two projects. The cash flows for the projects are given in the...
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 −$52 $27 $19 $18 $17 B −$101 $19 $40 $51 $58 a. What are the IRRs of the two​ projects? b. If your discount rate is 5.4%​, what are the NPVs of the two​ projects? c. Why do IRR and NPV rank the two projects​ differently? a. What...
You are choosing between two projects. The cash flows for the projects are given in the...
You are choosing between two projects. The cash flows for the projects are given in the following table​ ($ million): Project Year 0 Year 1 Year 2 Year 3 Year 4 A -$ 49 $ 24 $ 19 $ 20 $ 13 B -$ 100 $ 18 $ 39 $ 48 $ 59 a. What are the IRRs of the two​ projects? b. If your discount rate is 5.5 % what are the NPVs of the two​ projects? c. Why...
You are choosing between two projects. The cash flows for the projects are given in the...
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 $27 $ 21 $ 19 $ 12 B −$98 $20 $ 41 $ 51 $ 59 a. What are the IRRs of the two​ projects? (Round to one decimal​ place.) b. If your discount rate is 4.7%​ what are the NPVs of the two​ projects? c. Why...
You are choosing between two projects. The cash flows for the projects are given in the...
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 −$51 $24 $18 $21 $17 B −$102 $21 $38 $49 $61 a. What are the IRRs of the two​ projects? b. If your discount rate is 5.1%​, what are the NPVs of the two​ projects? c. Why do IRR and NPV rank the two projects​ differently?
You are choosing between two projects. The cash flows for the projects are given in the...
You are choosing between two projects. The cash flows for the projects are given in the following table​ ($ million): Project Year 0 Year 1 Year 2 Year 3 Year 4 A −$51 $26 $20 $18 $13 B −$101 $22 $39 $49 $58 a. What are the IRRs of the two​ projects? b. If your discount rate is 5.4%​, what are the NPVs of the two​ projects? c. Why do IRR and NPV rank the two projects​ differently? a. What...
You are choosing between two projects. The cash flows for the projects are given in the...
You are choosing between two projects. The cash flows for the projects are given in the following table​ ($ million): Project Year 0 Year 1 Year 2 Year 3 Year 4 A −$51 $26 $18 $19 $16 B −$100 $20 $41 $51 $60 a. What are the IRRs of the two​ projects? b. If your discount rate is 5.4%​, what are the NPVs of the two​ projects? c. Why do IRR and NPV rank the two projects​ differently? a. What...
You are choosing between two projects. The cash flows for the projects are given in the...
You are choosing between two projects. The cash flows for the projects are given in the following table​ ($ million): Project Year 0 Year 1 Year 2 Year 3 Year 4 A                                             -$52                                   $24                               $20                             $21                                   $17 B                                             -$100                                 $18                               $38                             $51                                   $60 a. What are the IRRs of the two​ projects? The IRR for project A is_______​%. ​(Round to one decimal​ place.) b. If your discount rate is 4.9%​, what are the NPVs of the two​ projects?______. c. Why...
You are choosing between two projects. The cash flows for the projects are given in the...
You are choosing between two projects. The cash flows for the projects are given in the following table​ ($ million): Project Year 0 Year 1 Year 2 Year 3 Year 4 A −$51 $24 $21 $22 $12 B −$102 $20 $38 $50 $58 a. What are the IRRs of the two​ projects? b. If your discount rate is 5.4 %, what are the NPVs of the two​ projects? c. Why do IRR and NPV rank the two projects​ differently?
You are choosing between two projects. The cash flows for the projects are given in the...
You are choosing between two projects. The cash flows for the projects are given in the following table​ ($ million): Project Year 0 Year 1 Year 2 Year 3 Year 4 A negative $ 48−$48 $ 27$27 $ 21$21 $ 21$21 $ 13$13 B negative $ 98−$98 $ 22$22 $ 39$39 $ 48$48 $ 60$60 a. What are the IRRs of the two​ projects? b. If your discount rate is 4.6 %4.6%​, what are the NPVs of the two​ projects?...
You are choosing between two projects. The cash flows for the projects are given in the...
You are choosing between two projects. The cash flows for the projects are given in the following table​ ($ million): Project Year 0 Year 1 Year 2 Year 3 Year 4 A −$52 $24 $20 $22 $14 B −$101 $22 $39 $49 $60 a. What are the IRRs of the two​ projects? b. If your discount rate is 4.7%​, what are the NPVs of the two​ projects? c. Why do IRR and NPV rank the two projects​ differently?
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT