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

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

Project

Year 0

Year 1

Year 2

Year 3

Year 4

A

$51

$27

$19

$18

$17

B

$98

$19

$39

$48

$61

a. What are the IRRs of the two projects?

b. If your discount rate is 4.9%, what are the NPVs of the two projects?

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

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