Solved: Projects having conventional cash flows, Finance Basics

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Projects having conventional cash flows

Problem: Projects A and B have the same cost, and both have conventional cash flows. The total cash inflows for A (undiscounted) are $400. The total for B is $360. The IRR for A is 20%; the IRR for B is 18%.

a) What can you deduce about the NPVs for Projects A and B?

b) What do you know about the crossover rate?

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Finance Basics: Projects having conventional cash flows

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