# NPV versus IRR

19. NPV versus IRR. Here are the cash flows for two mutually exclusive projects (data in Excel attachment)

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?

Project C0 C1 C2 C3

A ($20,000) $8,000 $8,000 $8,000

B ($20,000) $0 $0 $25,000

(data in Excel attachment)

Please include with your response any necessary formula to solve this problem (on a regular calculator, NOT a financial calculator), along with a detailed explanation of how to solve the problem.

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#### Solution Summary

The NPV and IRR of two projects are calculated.

$2.19