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| Subject:
Accounting and Finance
Category: Business and Money > Accounting Asked by: buffcode-ga List Price: $5.00 |
Posted:
03 Jun 2005 10:44 PDT
Expires: 03 Jul 2005 10:44 PDT Question ID: 528984 |
NPV/IRR. Consider projects A and B:
Cash Flows, Dollars
Project C0 C1 C2 NPV at 10%
A ?30,000 21,000 21,000 +$6,446
B ?50,000 33,000 33,000 +$7,273
Calculate IRRs for A and B.
Which project does the IRR rule suggest is best?
Which project is really best? |
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| Subject:
Re: Accounting and Finance
Answered By: wonko-ga on 03 Jun 2005 11:38 PDT |
A = 26%. B = 21%. IRR would say Project A. However, Project B has a higher NPV, so it should be selected. Sincerely, Wonko Source: "Go with the cash flow: Calculate NPV and IRR in Excel" Microsoft Corporation (2005) http://office.microsoft.com/en-us/assistance/HA011136321033.aspx |
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