1. Business
  2. Economics
  3. 5 and 10 b calculate the internal rate of return...

Question: 5 and 10 b calculate the internal rate of return...

Question details

1. A firm is considering two mutually exclusive projects: Project A costs $2000 now (Year 0) and yields a net benefit of $1200 per year in each of years 1-3 while Project B costs $1750 now (Year 0) and yields a net benefit of $800 per year in each of years 1-3 a. Calculate the net present value of projects A and B, using a discount rate of:

5% and 10%

b. Calculate the INTERNAL RATE OF RETURN for each project A and B.

c. Now calculate the IRR on INCREMENTAL PROJECT (A-B).

Solution by an expert tutor
Blurred Solution
This question has been solved
Subscribe to see this solution