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You are choosing between two projects. The cash flows for the projects are given in the...

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Finance

You are choosing between two projects. The cash flows for theprojects are given in the following table? ($ million): ProjectYear 0 Year 1 Year 2 Year 3 Year 4 A negative $ 49 $ 23 $ 19 $ 20 $13 B negative $ 102 $ 22 $ 39 $ 50 $ 58 a. What are the IRRs of thetwo? projects? b. If your discount rate is 5.3 %?, what are theNPVs of the two? projects? c. Why do IRR and NPV rank the twoprojects? differently?

Answer & Explanation Solved by verified expert
4.3 Ratings (752 Votes)
aProject 1 Internal rate of return is calculated using a financial calculator by inputting the below Press the CF button CF0 49 It is entered with a negative sign since it is a cash outflow Cash flow for each year should be entered Press Enter and down arrow after inputting each cash flow After entering the last cash flow cash flow press the IRR and CPT button to get the IRR of the project The IRR of project is 2140 Project 2 Internal rate of return is calculated    See Answer
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You are choosing between two projects. The cash flows for theprojects are given in the following table? ($ million): ProjectYear 0 Year 1 Year 2 Year 3 Year 4 A negative $ 49 $ 23 $ 19 $ 20 $13 B negative $ 102 $ 22 $ 39 $ 50 $ 58 a. What are the IRRs of thetwo? projects? b. If your discount rate is 5.3 %?, what are theNPVs of the two? projects? c. Why do IRR and NPV rank the twoprojects? differently?

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