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Your division is considering two facility investment projects, each of which requires an upfront expenditure of $15 million. You estimated that the investments will produce
Your division is considering two facility investment projects, each of which requires an upfront expenditure of $15 million. You estimated 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 | $6,000,000 |
What are the project's net present values, assuming the cost of capital is 10%, 5%, 15%. What does this analysis tell you about the projects?
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