NPV Your division is considering two investment projects, each of which requires an up-front expenditure of $17...

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Finance

NPV
Your division is considering two investment projects, each ofwhich requires an up-front expenditure of $17 million. You estimatethat the investments will produce the following net cash flows:
Year Project A Project B
1 $  6,000,000 $20,000,000
2 10,000,000 10,000,000
3 20,000,000 7,000,000
What are the two projects' net present values, assuming thecost of capital is 5%? Round your answers to the nearestdollar.
Project A $
Project B $

What are the two projects' net present values, assuming the cost ofcapital is 10%? Round your answers to the nearest dollar.
Project A $
Project B $

What are the two projects' net present values, assuming the cost ofcapital is 15%? Round your answers to the nearest dollar.
Project A $
Project B $
What are the two projects' IRRs at these same costs of capital?Round your answers to two decimal places.
Project A     %
Project B     %

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4.4 Ratings (704 Votes)

aProject A Net present value is solved using a financial calculator The steps to solve on the financial calculator Press the CF button CF0 17000000 It is entered with a negative sign since it is a cash outflow Cash flow for all the years should be entered Press Enter and down arrow after inputting each cash flow After entering the last cash flow press the NPV button and enter the cost of capital of 5 Press the down arrow and CPT buttons to get the net present value Net Present value of cash flows at 5 the cost of capital is 1506133247 Project B Net present value is solved using a financial calculator The steps to solve on the financial calculator Press the CF button CF0 17000000 It is entered with a negative sign since it is a cash outflow Cash flow for all the years should be entered Press Enter and down arrow See Answer

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NPVYour division is considering two investment projects, each ofwhich requires an up-front expenditure of $17 million. You estimatethat the investments will produce the following net cash flows:YearProject AProject B1$ 6,000,000$20,000,000210,000,00010,000,000320,000,0007,000,000What are the two projects' net present values, assuming thecost of capital is 5%? Round your answers to the nearestdollar.Project A $ Project B $ What are the two projects' net present values, assuming the cost ofcapital is 10%? Round your answers to the nearest dollar.Project A $ Project B $ What are the two projects' net present values, assuming the cost ofcapital is 15%? Round your answers to the nearest dollar.Project A $ Project B $ What are the two projects' IRRs at these same costs of capital?Round your answers to two decimal places.Project A %Project B %

Year	Project A	Project B
1	$ 6,000,000	$20,000,000
2	10,000,000	10,000,000
3	20,000,000	7,000,000