Project A requires an upfront investment of $40 million and generates a constant $4 million every year, starting in year 1, in perpetuity. Project B requires an upfront investment of $80 million and generates a constant $6 million every year, starting in year 1, in perpetuity. What is the IRR of the cash flows of switching from project B to project A? a. 5.00 percent. b. 6.00 percent. c. 7.00 percent. d. 4.00 percent. e. 3.00 percent. cross out ✔ cross out cross out cross out cross out

Project A requires an upfront investment of $40 million and generates a constant $4 million every year, starting in year 1, in perpetuity. Project B requires an upfront investment of $80 million and generates a constant $6 million every year, starting in year 1, in perpetuity. What is the IRR of the cash flows of switching from project B to project A? a. 5.00 percent. b. 6.00 percent. c. 7.00 percent. d. 4.00 percent. e. 3.00 percent. cross out ✔ cross out cross out cross out cross out

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter26: Capital Investment Analysis

Section: Chapter Questions

Problem 3CMA

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