Your division is considering two investment projects, each of which requires an up-front expenditure of $15 million.

Question:

Your division is considering two investment projects, each of which requires an up-front expenditure of $15 million. You estimate that the investments will produce the following net cash flows:

What are the two projects' net present values, assuming the cost of capital is 10 percent 5 percent 15 percent?

Project A Project B Year $20,000,000 10,000,000 6,000,000 $ 5,000,000 10,000,000 20,000,000

Net Present Value
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