Question: You are choosing between two projects. The cash flows for the projects are given in the following table ($ million) Project A= Year 0= -

You are choosing between two projects. The cash flows for the projects are given in the following table ($ million)

Project A=

Year 0= - $49

Year 1= $24

year 2= $21

Year 3= $18

Year 4= $13

Project B=

Year 0= - $99

year 1= $19

Year 2= $39

Year 3= $50

Year 4= $58

a. What are the IRRs of both project a and project b?

b. If your discount rate is 5.3%, what are the NPVs of both project a and project b?

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

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