Question
Your division is considering two investment projects, each of which requires an up-front expenditure of $17 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 $17 million. You estimate 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 | ||
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What are the two projects' net present values, assuming the cost of capital is 5%? Do not round intermediate calculations. 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%? Do not round intermediate calculations. 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%? Do not round intermediate calculations. Round your answers to the nearest dollar.
Project A: $
Project B: $
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What are the two projects' IRRs at these same costs of capital? Do not round intermediate calculations. Round your answers to two decimal places.
Project A: %
Project B: %
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Behavioral Finance And Capital Markets
Authors: A. Szyszka
5th Edition
1137338741, 9781137338747
