Internal rate of return for given forecasted cashflows


Problem: Two mutually exclusive investment projects have the following forecasted cashflows:

Year A B
0 -20000 -20000
1 10000 0
2 10000 0
3 10000 0
4 10000 60000

1) Compare the internal rate of return for each project

2) Compute the net present value for each project if the firm has a 10 percent cost of capital

3) Which project should be adopted? and Why?

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Finance Basics: Internal rate of return for given forecasted cashflows
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