# Economics Cash Flow and IRR Problem

Sep 21st, 2015
Anonymous
Category:
Accounting
Price: \$10 USD

Question description

Need help with this. Please show work.

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You have a choice between the following two mutually exclusive projects.  Assume cash is received at the end of the year.

 Net Cash Flow Year Project 'A' Project 'B' 0 \$(40,000.00) \$(40,000.00) 1 \$  30,000.00 \$  - 2 \$  20,000.00 \$  - 3 \$  10,000.00 \$  - 4 \$  - \$  50,000.00 5 \$  - \$  40,000.00

a.  (5 points) Plot the present value profile for both projects on the same graph. (Use a range between 0-100%)

b.  (5 points) Which project would you recommend if your investment opportunity interest rate is 10%? What is the NPV for each project at this rate?

c.  (5 points) Which project would you recommend if your investment opportunity interest rate is 20% what is the NPV for each project at this rate?

d.  (5 points) What is the IRR for each project?

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