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Business, 24.11.2021 02:50 christine44gordon

Consider the cash flows on the following two timelines : Timeline One: -210 105 105 105 105 0 1 2 3 4
Timeline Two: -210 130 130 130 0 1 2 3

The appropriate rate of return for the risks in both business opportunities is r = 9%. The IRR for Timeline One is 34.90%, while the IRR for Timeline Two is higher at 38.71%. The NPV for Timeline One is $130.17, while the NPV for Timeline Two is lower at $119.07. Why is the Net Present Value lower on the second transaction compared to the first transaction, even though the IRR on the second transaction is higher?

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Consider the cash flows on the following two timelines : Timeline One: -210 105 105 105 105 0 1 2...
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