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Consider the following project cash flows: compute NPV vs. IRR

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Consider the following project cash flows

Year Project A Project B
0 investment -$200 -$300
1 60 200
2 70 100
3 80 100
4 80

1. Calculate the NPV of each project. Which project should be chosen if opportunity cost is 11%?
2. IRR. What are the internal rates of return on projects A and B?

Please show all computations.

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Solution Summary

The solution shows the formula and calculates the answer with further narrative explanation.

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Please find calculations in the attached excel sheet.

1) Project B should be ...

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Manal Elkhoshkhany, MBA
Education
  • BA, Ain Shams University, Cairo Egypt
  • MBA, California State University, Sacramento
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