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Your division is considering two investment projects, each of which requires an up-front expenditure of $20 million. You estimate that the investments will produce the
Your division is considering two investment projects, each of which requires an up-front expenditure of $20 million. You estimate that the investments will produce the following net cash flows:
YearProject AProject B
1$5,000,000$20,000,000
210,000,00010,000,000
320.000.0006,000,000
a. What are the two projects NPVs assuming the cost of capital is 8%, 14%, 20%?
b. What are the two projects IRRs at those same costs of capital?
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Essential Mathematics For Economic Analysis
Authors: Knut Sydsaeter, Peter Hammond, Arne Strom
4th Edition
0273760688, 9780273760689
