Question
NPV Your division is considering two investment projects, each of which requires an up-front expenditure of $23 million. You estimate that the investments will produce
NPV
Your division is considering two investment projects, each of which requires an up-front expenditure of $23 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 | 8,000,000 | ||
What are the two projects' net present values, assuming the cost of capital is 5%? Do not round intermediate calculations. Round your answers to the nearest dollar.
Project A: $
Project B: $
What are the two projects' net present values, assuming the cost of capital is 10%? Do not round intermediate calculations. Round your answers to the nearest dollar.
Project A: $
Project B: $
What are the two projects' net present values, assuming the cost of capital is 15%? Do not round intermediate calculations. Round your answers to the nearest dollar.
Project A: $
Project B: $
What are the two projects' IRRs at these same costs of capital? Do not round intermediate calculations. Round your answers to two decimal places.
Project A: %
Project B: %
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Financial Markets And Institutions
Authors: Jeff Madura
9th Edition
1439038848, 978-1439038840
