A company is considering two potential projects.   Project Alpha requires an investment of 1,000,000 and will return 185,464.74 per year at the end of each of the next six years.  It has an IRR of α%. Project Beta requires and investment of 860,725 and will return 300,000 at the end of year one and 600,000 at the end of year two.  It has an IRR of β%. Calculate α-β.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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A company is considering two potential projects.

 

Project Alpha requires an investment of 1,000,000 and will return 185,464.74 per year at the end of each of the next six years.  It has an IRR of α%. Project Beta requires and investment of 860,725 and will return 300,000 at the end of year one and 600,000 at the end of year two.  It has an IRR of β%. Calculate α-β.

 

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