Discount Rate (r) 0.08 0.12 0.16 0.2 0.24 0.

28

1st Project
Cash Flow MM$
Year 1st Project 2nd Project
0 -3500 -3500
1 1450 413
2 1470 794
3 1015 963
4 1225 1165
5 200 1408 The project is feasible fo
6 400 1408
7 400 1408 2nd Project

The project is feasible fo

First project is preferable

 r NPV IRR
0.08 $1,324.64
0.12 $861.22
0.16 $491.56
23%
0.2 $194.40
0.24 ($46.06)
0.28 ($241.74)

he project is feasible for r equal 8%, 12%, 16% and 20% (IRR>r)

r NPV IRR
0.08 $1,713.89
0.12 $961.36
0.16 $390.47
20%
0.2 ($45.83)
0.24 ($381.24)
0.28 ($640.23)

he project is feasible for r equal 8%, 12%, 16% and 20% (IRR>=r)

rst project is preferable as it has a highier IRR