Question: Consider two projects with the following cash flows: Project 1 Project 2 Year Cash Flow Cash Flow 0 $2,000 $1,900 1 500 1,100 2 700

Consider two projects with the following cash flows:

Project 1 Project 2

Year Cash Flow Cash Flow

0 $2,000 $1,900

1 500 1,100

2 700 900

3 800 800

4 1,000 600

5 1,100 400

Answer:

a) What is the NPV @ 10% of project 2?

b) What is the IRR of project 2?

c) What is the MIRR @ 9% of project 1 with a re-investment rate of 5%?

d) What is the Payback period of project 1?

e) What is the crossover point for the two projects?

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