(The following information and Exhibit 2 apply to questions 6 through 8.)A company that uses a hurdle rate of 10% is evaluating two investment opportunities, shown in Exhibit 2, and can invest in only one of them. Project A requires an upfront investment of $200 million today and is expected to deliver $295 million in one year; project B requires an upfront investment of $400 million today and is expected to deliver $540 million in one year.

Exhibit 2 (In Millions of $)

YearAB0-$200.0-$400.01$295.0$540.0

The IRR of projects A and B respectively are ...

1 point

47.5% and 35.0%

12.2% in both cases.

54.0% and 22.5%

35.0% and 47.5%

22.5% and 54.0%

Question

The NPV of projects A and B respectively are ...

1 point

$52.6 million and $80.6 million

$76.4 million in both cases.

$68.2 million and $90.9 million

$80.6 million and $52.6 million

$90.9 million and $68.2 million