The NPV of projects A and B respectively are

a. $80.6 million and $52.6 million

b. $90.9 million and $68.2 million

c. $68.2 million and $90.9 million

d. $52.6 million and $80.6 million

e. $76.4 million in both cases.

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 $) Year 0 1 A -$200.0 $295.0 B -$400.0 $540.0