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What rate will the two projects have the same npv

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Reference no: EM132599445

Below are the cash flows for two projects.

Year                       Project A                 Project B

0                      -42,000                  -55,000

1                       15,000                   20,000

2                       15,000                    18,000

3                       14,000                  17,000

4                       14,000                   20,000

5                      14,000                   19,000

Question a. Compute the IRR for both projects.

Question b. Graph the NPV profiles for each project.

Question c. At what rate will the two projects have the same NPV?

Question d. Compute the profitability index for both projects. Use a 10% interest rate.

Question e. Compute NPV using a 10% rate.

Question f. Which project would you choose?

 

Reference no: EM132599445

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