Problem

Internal Rate of Return Projects A and B have the following cash flows: YearProject AP...

Internal Rate of Return Projects A and B have the following cash flows:

Year

Project A

Project B

0

‒$1,000

‒$2,000

1

CIA

CIB

2

C2A

C2B

3

C3A

C3B

a.If the cash flows from the projects are identical, which of the two projects would have a higher IRR? Why?


b.If C1B = 2C1A, C2B = 2C2A, and C3B = 2C3A, then is IRRA = IRRB?

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