1)Your division is considering two investment projects, each of which requires an up-front expenditure of 20 million. You estimate that the investment will produce the following net cash flows:

oWhat are the two project's net present values, assuming the cost of capital is 5%? 10%? 15%?

oWhat are the two projects' IRRs at these same costs of capital?

Year Project A Project B

1 $5,000,000 $20,000,000

2 10,000,000 10,000,000

3 20,000,000 6,000,000