These are the cash flows for two projects. Calculate the NPV and IRR for both. Then...

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Finance

These are the cash flows for two projects. Calculate the NPV andIRR for both. Then select the best project according to the NPVmeasure. Use a WACC of 10% for both projects. The investments are 7for project 1, and 8 for project 2.
Cash flows for project 1
year
1
2
3
4
cash
4
6
2
4
Cash flows for project 2
year
1
2
3
4
cash
3
2
7
4
Calculate the NPV for project 1. Remember to use 10% as theWACC.
Calculate the IRR for project 1. Remember the WACC is 10%. Givethe answer in percent.
Calculate the NPV for project 2, use a 10% WACC.
Calculate the IRR for project 2, write the result inpercent.
According to the NPV criterion, which is the best project toinvest in?

Answer & Explanation Solved by verified expert

4.4 Ratings (675 Votes)

1 project 1 NPV Present value of cash inflows present value of cash outflows NPV 7 4 1 011 6 1 012 2 1 013 4 1 014 NPV 583 2 IRR is the rate of return that See Answer

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Transcribed Image Text

These are the cash flows for two projects. Calculate the NPV andIRR for both. Then select the best project according to the NPVmeasure. Use a WACC of 10% for both projects. The investments are 7for project 1, and 8 for project 2.Cash flows for project 1year1234cash4624Cash flows for project 2year1234cash3274Calculate the NPV for project 1. Remember to use 10% as theWACC.Calculate the IRR for project 1. Remember the WACC is 10%. Givethe answer in percent.Calculate the NPV for project 2, use a 10% WACC.Calculate the IRR for project 2, write the result inpercent.According to the NPV criterion, which is the best project toinvest in?