NPV versus IRR: At what interest rate would you prefer Project A to B; what is IRR?
NPV versus IRR. Here are the cash flows for two mutually exclusive projects:
Project C0 C1 C2 C3
-$20,000 +$8,000 +$8,000 +$8,000
-$20,000 0 0 +$25,000
a. At what interest rates would you prefer project A to B? Hint: Try drawing the NPV profile of each project.
b. What is the IRR of each project?