Answers to Text Discussion Questions

Example 12 — IRR Distortions from Reinvestment Rate Assumption. A summary of four simple projects with IRR and NPV: Cash Inflows. Project Investment Year-1 Year-2 IRR NPV. A $ 2,000 $ - 0 - $ 4,500 50% $ 3,130. B 2,000 1,500 2,250 50% 2,810. C 2,000 2,450 1,000 55% 2,640 ... ................
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