Consider the following mutually exclusive investments
|
T=0
|
1
|
2
|
|
Investment A:
|
-100
|
20
|
120
|
|
Investment B:
|
-100
|
100
|
31.25
|
Find IRRs for both projects
Draw a graph, where 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 NPVs should be on the same graph.
Find the cross over rate
Please describe as fully as possible which project is the best.