You are choosing between two projects. The cash flows for theprojects are given in the following table? ($ million):
Project | Year 0 | Year 1 | Year 2 | Year 3 | Year 4 |
A | ?$49 | $24 | $20 | $18 | $13 |
B | ?$100 | $22 | $38 | $48 | $62 |
a. What are the IRRs of the two? projects?
b. If your discount rate is
4.6%?,
what are the
NPVs
of the two? projects?
c. Why do IRR and NPV rank the two projects? differently?
