Question: The CEO of BigCo has just bought a fancy financial
The CEO of BigCo has just bought a fancy financial calculator and calculated the IRR and NPV of Project D from Table 1 and is utterly confused. His calculator is telling him that the IRR is 26 percent, but when he uses a cost of capital of 1 percent, the NPV is negative. The CEO expects that if the IRR is greater than the cost of capital then the NPV should be positive. How are the CEO’s observations possible?
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