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 | ||
What are the two projects' net present values, assuming the cost of capital is 5%, 10% and 15%?
What are the two projects' IRRs at these same costs of capital?
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Financial Management For Nonprofit Human Service Organizations
Authors: Raymond Sanchez Mayers
2nd Edition
0398075131, 9780398075132
