3. 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

• What are the two projects net present values, assuming the cost of capital is 5%? 10%? 15%?
• What are the two projects IRRs at these same costs of capital?

Show your work.