Project C0 C1 C2 C3
-$20,000 +$8,000 +$8,000 +$8,000
-$20,000 0 0 +$25,000
a. At what interest rates would you prefer project A to B? Hint: Try drawing the NPV profile of each project.
b. What is the IRR of each project?© BrainMass Inc. brainmass.com June 3, 2020, 6:07 pm ad1c9bdddf
a. At what interest rates would you prefer poject A to B?
Let Payment = 8000
FV = -25000
PV = 0
Number of periods = 3
compute Rate = 4.11%
Then if Rate < 4.11%, the PV of ...
The solution shows all the calculations to arrive at the correct responses to the questions.