). Using the net present value method, which project should be accepted? (b). Using the internal rate of return method, which project should be accepted? (c). If the cost of capital increases to 20 per cent in year 5, would your advice change?
Better plc is comparing two mutually exclusive projects, whose details are given below.
The company’s cost of capital is 12 per cent.
Project A Project B
£m £m
Year 0 (150) (152)
Year 1 40 80
Year 2 50 80
Year 3 60 50
Year 4 60 40
Year 5 80 30
(a). Using the
(b). Using the
(c). If the cost of capital increases to 20 per cent in year 5, would your advice change?
Hello.i have the solution you send me but i am trying to understand where did you get the calculations for in the worknotes tabel.
I still cant calculate the IRR.i really dont understand how to do it.
Can you help me please by using the numbers in the tabel so i can understand what is that you are adding or taking away please?
I know how to calculate the NPV but not the IRR
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