B D EF G H J K L M N O P Q 0 P R S T U 1 4 Better Health Inc. is evaluating two investment projects, each of which requires an up-front expenditure of $2.8 2 million. The projects are expected to produce the following net cash inflows: 3 Year Project A Project B 0 ($2,800,000) ($2,800,000) 6 1 $1,100,000 $1,600,000 7 2 $1,500,000 $1,500,000 3 $1,800,000 $900,000 9 10 a. What is each project's IRR? 5 Year 0 1 2 3 10.0% Project A Project B ($2,800,000) $2,800,000) $1,000,000 $1,000,000 $1,000,000 $1,000,000 $800,000 $500,000 8 NPV ($463,410.97) ($688,805.41) 0% -6% IRR 11 12 Project A Project B 13 24.15% 22.38% 14 15 b. What is each project's NPV if the cost of capital is 10 percent? 16 17 Project A Project B 18 $792,036.06 $570,398.20 19 20 . Which one would you buy? 21 22 23 24 25