What is the IRR for Method A and IRR for Method B

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Question - Capitol Health Plans, Inc. is evaluating two different methods for providing home health services to its members. Both methods involve contracting out for services, and the health outcomes and revenues are not affected by the method chosen. The cost of capital is 9%. The incremental cash flows for the decision are all outflows. Here are the projected flows:

Year Method A Method B

0 -$300,000 -$120,000

1 -$66,000 - $96,000

2 -$66,000 - $96,000

3 -$66,000 - $96,000

4 -$66,000 - $96,000

5 -$66,000 - $96,000

What is the IRR for Method A and IRR for Method B.

What is the NPV for Method A and NPV for Method B.

Holding any qualitative factors aside, which method should be chosen based on this analysis?

Reference no: EM133044181

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