Question: Fred Jones, the financial manager of ABC Widgets is considering two different projects to undertake. Project A is not very risky, so Jones decides to discount its future cash flows at 12 percent. Project B is very risky, so Jones decides to discounts its cash flows at 14 percent. The NPV for project A is: ____________. The IRR for project A is: ___________. The NPV for project B is:________. The IRR for project B is: _____
Project A Project B Year 0 -$20,000 -$30,000
Year 1 $11,000 $11,000
Year 2 $10,000 $10,000
Year 3 $12,000 $15,000
Year 4 $11,000 $17,000