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

negative $ 52$52

$ 27$27

$ 19$19

$ 20$20

$ 15$15

B

negative $ 100$100

$ 19$19

$ 39$39

$ 49$49

$ 60$60

a. What are the IRRs of the two projects?

b. If your discount rate is

4.7 %4.7%,

what are the

NPVs

of the two projects?

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

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