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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 investment 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 investment 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
a.What are the two projects net present values, assuming the cost of capital is 5%? 10%? 15%?
b.What are the two projects IRRs at these same costs of capital?Show your work
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