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2. Your division is considering two investment projects, each of which requires an up-front expenditure of $14 million. You estimate that the investments will produce
2. Your division is considering two investment projects, each of which requires an up-front expenditure of $14 million. You estimate that the investments will produce the following net cash flows: 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
a. What are the two projects NPVs assuming the cost of capital is 4%, 11%, 16%?
b. What are the two projects IRRs at those same costs of capital?
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