F97F.1
1.Your company is considering two projects with the following cash flows:
| 0 | 1 | 2 | 3 | |
| A | -40 | 30 | 50 | -30 |
| B | -60 | 40 | 40 |
What are the NPV's of the projects (assume an 8% discount rate)? (5 pts)
What is the MIRR for the project with the higher NPV? (7 pts)
If you are going to repeat A or B forever, which one is best? (7 pts)
1 (cont.) Which of the following problems with IRR apply to these cashflows (circle all that apply): (4 pts)
a.Size Disparity Problem
b.Timing Disparity Problem
c.Different Lives Problem
d.Borrowing/Lending Problem