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7. Project X requires pounds 10m investment and generates pounds10m in Year 1 and Year...

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Finance

7. Project X requires pounds 10m investment and generates pounds10m in Year 1 and Year 2. Assuming a 10% discount rate, it has an NPV of pounds 7,4m, and its IRR is 61.896. Project Y requires pounds 1m investment and generate pounds 2m in Year 1 and Year 2. Using a discount rate of 10%, its NPV and IRR turn out to be pounds1.6m and 141.4%, respectively. If projects with IRRS higher than 20% are acceptable, which of the following statements are true?

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