Startup, a start-up company is considering the following projects: Cash Flows 0 2 1 -1000 350...

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Startup, a start-up company is considering the following projects: Cash Flows 0 2 1 -1000 350 450 Years Project A REQUIRED Project B -10000 300 350 0 0 3 4 600 750 450 5500 0 A manager has calculated that the NPV of Project A is £468 and its IRR is 34%, while the NPV of Project B is £1359 and its IRR is 21%. 1. Explain why the NPV and the IRR rules give the manager a different ranking for these projects. 2. If the company can take only one of these projects, which of the two projects would you advise it to choose? Startup, a start-up company is considering the following projects: Cash Flows 0 2 1 -1000 350 450 Years Project A REQUIRED Project B -10000 300 350 0 0 3 4 600 750 450 5500 0 A manager has calculated that the NPV of Project A is £468 and its IRR is 34%, while the NPV of Project B is £1359 and its IRR is 21%. 1. Explain why the NPV and the IRR rules give the manager a different ranking for these projects. 2. If the company can take only one of these projects, which of the two projects would you advise it to choose?

Answer rating: 100% (QA)

1 Explanation of NPV and IRR Differences The Net Present Value NPV and Internal Rate of Return IRR m... View the full answer