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7. Your division is considering two facility investment projects, each of which requires an upfront expenditure of $15 million. You estimate that the investments
7. Your division is considering two facility investment projects, each of which requires an upfront expenditure of $15 million. You estimate that the investments will produce the following net cash flows: YEAR 1 2 3 PROJECT A $5,000,000 $10,000,000 $20,000,000 PROJECT B $20,000,000 $10,000,000 $6,000,000 What are the projects' net present values, assuming the cost of capital is 10%? 5%? 15%? What does this analysis tell you about the projects?
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