In: Finance
Project |
Year 0 |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
A |
-$103 |
28 |
34 |
44 |
53 |
B |
-$103 |
53 |
44 |
34 |
24 |
What is the IRR of each project? Which project should you
choose?
Select one:
a. IRR of Project A = 17.7%, IRR of Project B = 21.7%. Choose project A.
b. IRR of Project A = 17.7%, IRR of Project B = 21.7%. Choose project B.
c. IRR cannot be used to compare these projects. Choose project A because it has a higher NPV.
d. IRR of Project A = 11.9%, IRR of Project B = 17.7%. Choose project B.
*Please calculate manually and show step by step, I need a major refresher on IRR and NPV
Answer : (b) IRR of Project A = 17.7%, IRR of Project B = 21.7%. Choose project B.
Excel sheet used to solve the question :
Formula sheet :