Your division is considering two investment projects, each of which requires an up-front expenditure of $23...

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Finance

Your division is considering two investment projects, each ofwhich requires an up-front expenditure of $23 million. You estimatethat the investments will produce the following net cash flows:
Year Project A Project B
1 $ 4,000,000 $20,000,000
2 10,000,000 10,000,000
3 20,000,000 8,000,000
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 Â Â %
Project B: Â Â Â Â Â %

Answer & Explanation Solved by verified expert

3.9 Ratings (466 Votes)

aiProject ANet present value is calculated using a financial calculator byinputting the belowPress the CF buttonCF0 23000000 It is entered with a negative sign since itis a cash outflowCash flow for each year should be enteredPress Enter and down arrow after inputting each cash flowAfter entering the last cash flow cash flow press the NPVbutton and enter the cost of capital of 5Press enter after that Press the down arrow and CPT buttons toget the net present valueThe net present value of cash flows is 7156570577156571Project BNet present value is calculated using a financial calculator byinputting the belowPress the CF buttonCF0 23000000 It is entered with a negative sign since itis a cash outflowCash flow for each year should be enteredPress Enter and down arrow after inputting each cash See Answer

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Year	Project A	Project B
1	$ 4,000,000		$20,000,000
2	10,000,000		10,000,000
3	20,000,000		8,000,000