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The following table presents the forecasted cash flows for Project A and Project B. These two...

The following table presents the forecasted cash flows for Project A and Project B. These two projects are mutually exclusive. Construct a NPV profile to illustrate whether the project choice is dependent upon the discount rate. Your NPV profile should include the following information:

a) The NPV of both projects at discount rates of 0%, 10%, and 20%,

b) The IRR of both projects,

c) The incremental IRR (crossover rate) for the two projects (if it exists). Clearly explain the conclusions to be drawn from the NPV profile.

Time Project A Project B
0 -49000 -45000
1 8000 25000
2 10000 20000
3 20000 12000
4 34000 5000

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jeff jeffy answered 3 years ago
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