3. 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: 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 What are the two project's net present values, assuming the cost of capital is 5%? 10%? 15%? What are the two projects' IRRs at these same costs of capital? Project A Year A Cash flow PV (5%) PV calculation PV B A*B 1/(1+0.05)^0 0 -20,000,000 1 5,000,000 1/(1+0.05)^1 2 10,000,000 1 / (1+0.05)^2 3 20,000,000 1/(1+0.05)^3 NPV (discount rate * rate of cash flow) = Project B Year Cash flow PV (5%) PV calculation PV A B A*B 0 -20,000,000 1 / (1+0.05)^0 1 20,000,000 1/(1+0.05)^1 2 10,000,000 1/(1+0.05)^2 3 6,000,000 1/(1+0.05)^3 NPV (discount rate * rate of cash flow) = Project A Year Cash flow PV (5%) PV calculation PV A B A*B 0 -20,000,000 1/(1+0.05)^0 1 5,000,000 1/(1+0.05)^1 2 10,000,000 1/(1+0.05)^2 3 20,000,000 1/(1+0.05)^3 IRR (values [guess]) = Project B Year Cash flow PV (5%) PV calculation PV A B A*B 0 -20,000,000 1/(1+0.05)^0 1 20,000,000 1/(1+0.05)^1 2 10,000,000 1/(1+0.05)^2 3 6,000,000 1/(1+0.05)^3 IRR (values [guess]) =