The following table shows the forecast cash flows for two projects: C₁ C4 C5 $28 $28 $1,264 74 A B It Co -$1,080 -1,080 Now suppose that the term structure is upward sloping and investors demand a higher return on the more distant flows as in the Following table: Req A1 C₂ $28 74 t IRRA IRRB 1 2 3 4.0% 4.5% 5.0% Req A2 a-1. Calculate the IRR on the two projects. a-2. Calculate the NPV on the two projects. a-3. Do the two measures give the same ranking for the two projects? $28 1,090 Complete this question by entering your answers in the tabs below. 4 5.5% 5.20 % % 5 6.0% Req A3 Calculate the IRR on the two projects. Note: Do not round intermediate calculations. Round your answers to 2 decimal places.

The following table shows the forecast cash flows for two projects: C₁ C4 C5 $28 $28 $1,264 74 A B It Co -$1,080 -1,080 Now suppose that the term structure is upward sloping and investors demand a higher return on the more distant flows as in the Following table: Req A1 C₂ $28 74 t IRRA IRRB 1 2 3 4.0% 4.5% 5.0% Req A2 a-1. Calculate the IRR on the two projects. a-2. Calculate the NPV on the two projects. a-3. Do the two measures give the same ranking for the two projects? $28 1,090 Complete this question by entering your answers in the tabs below. 4 5.5% 5.20 % % 5 6.0% Req A3 Calculate the IRR on the two projects. Note: Do not round intermediate calculations. Round your answers to 2 decimal places.

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter7: Corporate Valuation And Stock Valuation

Section: Chapter Questions

Problem 11P: Brook Corporation’s free cash flow for the current year (FCF0) was $3.00 million. Its investors...

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