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? Question 3 4 pts Consider the two cash flow streams below: 0 2 Option Y: 2,000900 -900 Option Z:-2,500 13001300 Which project has the higher IRR? Which project has the higher NPV if required return is 10.4%? O Option Y has higher IRR: Option Y has higher NPV O Option Y has higher IRR: Option Z has higher NPV O Option Z has higher IRR; Option Y has higher NPV O Option Z has higher IRR: Option Z has higher NPV
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Answer #1

The correct answer is:- Option Z has higher IRR; Option Y has higher NPV

IRR of option Y = - 6.75%

IRR of option Z = 2.66%

NPV of option Y = 2000 - 900\div1.1041 - 900 \div 1.1042

NPV of option Y = $ 446.36

NPV of option Z = - $ 2500 + $ 1300 \div 1.1041 + $ 1300 \div 1.1042

NPV of option Z = - $ 255.85

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