Question 6
(The following information and Exhibit 2 apply to questions 6 through 8.) A company that uses a hurdle rate of 10% is evaluating two investment opportunities, shown in Exhibit 2, and can invest in only one of them. Project A requires an upfront investment of $200 million today and is expected to deliver $295 million in one year; project B requires an upfront investment of $400 million today and is expected to deliver $540 million in one year.
Exhibit 2 (In Millions of $)
| Year | A | B |
| 0 | -$200.0 | -$400.0 |
| 1 | $295.0 | $540.0 |
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The IRR of projects A and B respectively are …
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