Question
our 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
our 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 | $ 4,000,000 | $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%? 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%? 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%? Round your answers to the nearest dollar.
Project A $
Project B $
What are the two projects' IRRs at these same costs of capital? 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
Lectures On Public Economics
Authors: Anthony B. Atkinson, Joseph E. Stiglitz
1st Edition
0691166412, 978-0691166414
