a-1. Calculate the IRR on the two projects.

Note: Do not round intermediate calculations. Round your answer to 2 decimal places.

IRR A = _________%

IRR B = _________%

a-2. Calculate the NPV on the two projects.

Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.

NPV A =

NPV B =

a-3. Do the two measures give the same ranking for the two projects?

Yes or No?

Transcribed Image Text:

The following table shows the forecast cash flows for two projects: A B Co -$1,040 -1,040 C $24 C $24 C C5 62 62 $24 1,070 $24 $1,232 Now suppose that the term structure is upward sloping and investors demand a higher return on the more distant flows as in the following table: t 1 rt 4.0% 2 4.5% 3 4 5 5.0% 5.5% 6.0% a-1. Calculate the IRR on the two projects. a-2. Calculate the NPV on the two projects. a-3. Do the two measures give the same ranking for the two projects? Complete this question by entering your answers in the tabs below. Req A1 Req A2 Req A3 Calculate the IRR on the two projects. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. IRRA IRRB % % The following table shows the forecast cash flows for two projects: A B Co -$1,040 -1,040 C $24 C $24 C C5 62 62 $24 1,070 $24 $1,232 Now suppose that the term structure is upward sloping and investors demand a higher return on the more distant flows as in the following table: t 1 rt 4.0% 2 4.5% 3 4 5 5.0% 5.5% 6.0% a-1. Calculate the IRR on the two projects. a-2. Calculate the NPV on the two projects. a-3. Do the two measures give the same ranking for the two projects? Complete this question by entering your answers in the tabs below. Req A1 Req A2 Req A3 Calculate the IRR on the two projects. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. IRRA IRRB % %