Question
In: Finance
Suppose now the two projects are contingent. What is the joint IRR?
Use the following information:
Project A: -$50, -$25, $15, $30, $80 in years 0, 1, 2, 3, 4
Project B: -$100, $0, $0, $40, $140 in years 0, 1, 2, 3, 4
Cost of Capital: 10%
Suppose now the two projects are contingent. What is the joint IRR?
Solutions
Expert Solution
Joint IRR:
CF0 = (-50) + (-100) = -$150
CF01 = -$25 + $0 = -$25
CF02 = $15 + $0 = $15
CF03 = $30 + $40 = $70
CF04 = $80 + $140 = $220
Inputting these values in financial calculator, then press "IRR", and "CPT", we get,
IRR = 17.13%
Therefore, Joint IRR = 17.13%
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