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

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Finance

our 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 ProjectA ProjectB
1 $ 4,000,000 $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 costof capital is 5%? Do not round intermediate calculations. Roundyour answers to the nearest dollar.
Project A: $Â Â
Project B: $Â Â
What are the two projects' net present values, assuming the costof capital is 10%? Do not round intermediate calculations. Roundyour answers to the nearest dollar.
Project A: $Â Â
Project B: $Â Â
What are the two projects' net present values, assuming the costof capital is 15%? Do not round intermediate calculations. Roundyour answers to the nearest dollar.
Project A: $Â Â
Project B: $Â Â
What are the two projects' IRRs at these same costs of capital?Do not round intermediate calculations. Round your answers to twodecimal places.
Project A: Â Â Â %
Project B: Â Â Â %

Answer & Explanation Solved by verified expert

3.6 Ratings (625 Votes)

YearProject AProject BCash FlowPV of CashFlowCash FlowPV of CashFlow0170000001700000017000000170000001400000040000001r120000000200000001r1210000000100000001r210000000100000001r2320000000200000001r3600000060000001r3Where rcost of capitalNtime of projecta r5005NPVProject A 400000010051 1000000010052 2000000010053 17000000 380952381 9070294785 1727675197 17000000 See Answer

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