Question: Consider the two cash flow streams below: 0 1 2 Option Y 1000 -750 -750 Option X -1000 700 700 Which project has the higher

Consider the two cash flow streams below:

0 1 2
Option Y 1000 -750 -750
Option X -1000 700 700

Which project has the higher IRR? Which project has the higher NPV if required return is

10%?

Answer: Option Y (31.87% vs. 25.69%); Option Z ($214.88 vs. $-301.65)

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