Question: You are choosing between two projects. The cash flows for the projects are given in the following table: Project Year 0. Year 1. Year 2.

You are choosing between two projects. The cash flows for the projects are given in the following table:

Project Year 0. Year 1. Year 2. Year 3. Year 4

A. -$51. $24. $21. $18. $16

B -$101. $20. $38. $50. $58

a. What are the IRRs of the two projects? A____%. B____%

b. If your discount rate is 5.3%, what are the NPVs of the two projects?

c. Why do IRR and NPV rank the two projects differently?

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