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

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Question

Finance

You are choosing between two projects. The cash flows for the projects are given in the following table ($ million):

Project

Year 0

Year 1

Year 2

Year 3

Year 4

A

$52

$26

$19

$22

$17

B

$98

$22

$38

$50

$61

a. What are the IRRs of the two projects?

b. If your discount rate is

4.5%,

what are the

NPVs

of the two projects?

c. Why do IRR and NPV rank the two projects differently?

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