Assume the discount rate is $10\%.$ there are two projects A and B$.$ project A is a one year project with an investment cost of $1000$ and a cash flow of $1400$ in year one. project b is an infinitely lived project with an investment cost of $2000$ and an annual cash flow of $250.$ 

a$.$ what are the net present values of the two projects?

b$.$ what is the internal rate of return of the two projects?

c$.$if you could pick only one project $($the projects are mutally exclusive$)$ which one would you choose? 

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To solve the questions we will calculate the Net Present Value NPV and Internal Rate of Return IRR f... View the full answer