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NPV Profiles:

NPV Profiles:

Discount Rate                                 NPV Project 1                                 NPV Project 2

0%                                                      $20                                                    $40

5%                                                      12                                                       21

10%                                                    4                                                         5

15%                                                    -2                                                        8

20%                                                    -8                                                        19

25%                                                    -20                                                      28


Required Rate of Return: 9%


a.     According to IRR, which project would you choose no matter the opportunity cost?


b.     At a discount rate of 9%, which one would you choose according to NPV?

Top Answer

(a)Project with net present value greater than zero increases stockholder return. Project with net present value less than... View the full answer

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