Question: The net present value rule versus the internal rate of return rule. You must choose between the two projects whose cash flows are shown below. The projects have the same risk. Project A Project B Now $12,000 $2,400 End-of-Year 1 7,900 2,500 End of Year 2 6,850 950
a. Compute the internal rate of return and the net present value for the two projects. Assume a 10 percent discount rate.
b. Which of the projects is better according to each of the two methods?