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Question 1092  NPV, IRR

Your boss the chief financial officer (CFO) asked you to complete the analysis of 3 different projects under consideration by the company's board. All projects require an initial investment and then provide a perpetuity of cash flows with zero growth. All are equally risky with the same 10% pa required return. All figures are rounded to 4 decimal places. The projects can all be accepted and funded, they're not mutually exclusive.

The projects' initial costs and perpetual annual cash flows were provided by the engineering and marketing departments, and the CFO completed some of the NPV's and IRR's but ran out of time and gave it to you to finish. This data is believed to be accurate. You calculated the remaining NPV's and IRR's in bold, and made some conclusions about which projects to accept or reject (stated in answer option d). The CFO thanked you for your swift work, but said there's just one thing wrong with your calculations or conclusions, and asked you to fix it up before the table and conclusions are shown at the board meeting tomorrow.

Projects with 10% pa required return
  Initial cash
flow at t=0
Perpetual annual
cash flow from t=1
  ($m) ($m) ($m) (% pa)
Project A -160 19 30 (a) 11.875
Project B -2,200 190 (b) -300 8.6364
Project C -20,000 1,600 (c) -4,000 8


Which one of the following calculations or conclusions is NOT correct?