Purchase Solution

# NPV versus IRR

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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.

##### Solution Summary

The NPV and IRR of two projects are calculated.

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