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What will be project B IRR

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Question - a) Mitra Associates is planning to earn perpetual cash flows of 1 lakh every year from a new business idea. The only investment it requires to implement this, is an office building and luckily it already owns an unused space which can be used for this purpose without any additional investment. This office space was bought by Mitra ten years back for 10,000 and is now worth approx. 5 lakhs. What is the NPV of this proposal using a discount rate of 25%?

b) A and B are one year projects with A being the smaller project. A has an IRR of 20%. B requires 50% additional investment than A and the incremental IRR of B over A is also 20%. What will be project B's IRR?

Reference no: EM133013285

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