Consider the following mutually exclusive investments T=0, 1, 2 Investment A: -200, 40, 210 Investment B: -200, 170, 70

a. Find IRRs for both projects

b. “Draw” a graph of NPV schedules using Excel, in which you will show the NPV of each project as a function of its discount rate (i.e NPV on the vertical axis and r on the horizontal axis). Both NPV schedules should be on the same graph.

c. Solve for the crossover rate

d. Please describe as fully as possible which project is the best and under which circumstances.

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