Consider the following two projects: Cash flows Project A Project B C0 ?$ 280 ?$ 280 C1 120 148 C2 120 148 C3 120 148 C4 120 a.What are the internal rates of return on the two projects? b....

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Finance

Consider the followingtwo projects:
Cashflows Project A Project B
C₀ ?$ 280 ?$ 280
C₁ 120 148
C₂ 120 148
C₃ 120 148
C₄ 120
a.What are the internal rates of return on thetwo projects?
b. If the opportunity cost of capital is 11%,what is the profitability index for each project?

Answer & Explanation Solved by verified expert

4.1 Ratings (501 Votes)

Project A IRR is the rate at which NPV 0 IRR 0256780467 Year 0 1 2 3 4 Cash flow stream 280 120 120 120 120 Discounting factor 1 125678 1579497 1985081 24948112 Discounted cash flows project 280 9548207 7597355 6045093 48099832 NPV Sum of discounted cash flows NPV Project A 0006376837 Where Discounting factor 1 See Answer

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Consider the following two projects: Cash flows Project A Project B C0 ?$ 280 ?$ 280 C1 120 148 C2 120 148 C3 120 148 C4 120 a.What are the internal rates of return on the two projects? b....

70.2K

Verified Solution

Question

Finance

Consider the followingtwo projects:
Cashflows Project A Project B
C₀ ?$ 280 ?$ 280
C₁ 120 148
C₂ 120 148
C₃ 120 148
C₄ 120
a.What are the internal rates of return on thetwo projects?
b. If the opportunity cost of capital is 11%,what is the profitability index for each project?

Answer & Explanation Solved by verified expert

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Cashflows	Project A		Project B
C₀	?$	280	?$	280
C₁		120		148
C₂		120		148
C₃		120		148
C₄		120

Consider the following two projects: Cash flows Project A Project B C0 ?$ 280 ?$ 280 C1 120 148 C2 120 148 C3 120 148 C4 120 a.What are the internal rates of return on the two projects? b....

70.2K

Verified Solution

Question

Finance

Consider the followingtwo projects:CashflowsProject AProject BC0?$280?$280C1120148C2120148C3120148C4120a.What are the internal rates of return on thetwo projects?b. If the opportunity cost of capital is 11%,what is the profitability index for each project?

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Consider the followingtwo projects:
Cashflows Project A Project B
C₀ ?$ 280 ?$ 280
C₁ 120 148
C₂ 120 148
C₃ 120 148
C₄ 120
a.What are the internal rates of return on thetwo projects?
b. If the opportunity cost of capital is 11%,what is the profitability index for each project?