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What is the IRR of each project

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NPV versus IRR. Here are the cash flows for two mutually exclusive projects:

Project C0 C1 C2 C3
A -$20,000 +8,000 +8,000 +8,000
B -$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?

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Solution Summary

The solution determines what the IRR of each project is.

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