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?© BrainMass Inc. brainmass.com December 19, 2018, 9:52 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 ...
Net present value and other investment criteria are emphasized.