You've estimated the following cash flows (in $) for two projects: A B C 1 Year Project A Project B 2 0 -71 -254 3 1 15 50 4 2 21 73 5 3 29 82 6 4 25.2 113.24 The required return is 7% for both projects. 1. What is the IRR for project A? 2. What is the IRR for project B? 3. What is the NPV of project A? 4. What is the NPV of project B? 5. If the projects are mutually exclusive, which project should you choose? Project B, based on the NPV Project A, based on the IRR Project A, based on the NPV Project B, based on the IRR
You've estimated the following cash flows (in $) for two projects: A B C 1 Year Project A Project B 2 0 -71 -254 3 1 15 50 4 2 21 73 5 3 29 82 6 4 25.2 113.24 The required return is 7% for both projects. 1. What is the IRR for project A? 2. What is the IRR for project B? 3. What is the NPV of project A? 4. What is the NPV of project B? 5. If the projects are mutually exclusive, which project should you choose? Project B, based on the NPV Project A, based on the IRR Project A, based on the NPV Project B, based on the IRR
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
Section: Chapter Questions
Problem 1PS
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Question
You've estimated the following cash flows (in $) for two projects:
A | B | C | |
1 | Year | Project A | Project B |
2 | 0 | -71 | -254 |
3 | 1 | 15 | 50 |
4 | 2 | 21 | 73 |
5 | 3 | 29 | 82 |
6 | 4 | 25.2 | 113.24 |
The required return is 7% for both projects.
1. What is the IRR for project A?
2. What is the IRR for project B?
3. What is the NPV of project A?
4. What is the NPV of project B?
5. If the projects are mutually exclusive, which project should you choose?
Project B, based on the NPV
Project A, based on the IRR
Project A, based on the NPV
Project B, based on the IRR
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