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# Net present value

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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?

b. What is the IRR of each project?

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https://brainmass.com/economics/investments/net-present-value-73449

#### Solution Preview

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 ...

#### Solution Summary

Net present value and other investment criteria are emphasized.

\$2.19
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