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Unformatted text preview: 1113 a.
NPV
($)
1,000
900
800
700
600
500 Project A 400
300
200 Project B
Cost of
Capital (%) 100 100 5 10 15 20 25 30 200
300 r
0.0%
10.0
12.0
18.1
20.0
24.0
30.0 NPVA
$890
283
200
0
(49)
(138)
(238) NPVB
$399
179
146
62
41
0
(51) b. IRRA = 18.1%; IRRB = 24.0%.
c. At r = 10%, Project A has the greater NPV, specifically $283.34 as compared to
Project B's NPV of $178.60. Thus, Project A would be selected. At r = 17%, Project
B has an NPV of $75.95 which is higher than Project A's NPV of $31.05. Thus,
choose Project B if r = 17%. Answers and Solutions: 11  13 ...
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This note was uploaded on 07/13/2011 for the course FIN 4414 taught by Professor Staff during the Spring '08 term at University of Florida.
 Spring '08
 Staff

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