Question: Consider the following two mutually exclusive projects: Cash Flows ($ millions) Project C 0 C 1 C 2 C 3 A 200 +110 +120 0

Consider the following two mutually exclusive projects:

Cash Flows ($ millions)

Project C₀ C₁ C₂ C₃

A 200 +110 +120 0

B 200 0 0 +250

A. Calculate IRR for A, IRR for B, and the cross-over rate of the two projects. (using financial calculator also)

B. What is the range of the discount rate (to calculate NPV) that A should be chosen; and what is the range of the discount rate that B should be chosen?

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