You are choosing between two projects. The cash flows for the projects are given in the following table ($ million): a. What are the IRRS of the two projects? b. If your discount rate is 5.4% what are the NPVs of the two projects? c. Why do IRR and NPV rank the two projects differently? Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Project A Year 0 Year 1 Year 2 Year 3 Year 4 - $49 $25 $21 $20 $15 B - $102 $19 $38 $48 $60 -

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 6PB: There are two projects under consideration by the Rainbow factory. Each of the projects will require...
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You are choosing between two projects. The cash flows for the projects are given in the following table ($ million):
a. What are the IRRS of the two projects?
b. If your discount rate is 5.4% what are the NPVs of the two projects?
c. Why do IRR and NPV rank the two projects differently?
Data table
(Click on the following icon in order to copy its contents into a spreadsheet.)
Project
A
Year 0
Year 1
Year 2
Year 3
Year 4
- $49
$25
$21
$20
$15
B
- $102
$19
$38
$48
$60
-
Transcribed Image Text:You are choosing between two projects. The cash flows for the projects are given in the following table ($ million): a. What are the IRRS of the two projects? b. If your discount rate is 5.4% what are the NPVs of the two projects? c. Why do IRR and NPV rank the two projects differently? Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Project A Year 0 Year 1 Year 2 Year 3 Year 4 - $49 $25 $21 $20 $15 B - $102 $19 $38 $48 $60 -
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