Question: Problem 10-07 NPV Your division is considering two investment projects, each of which requires an up-front expenditure of $19 million. You estimate that the investments
Problem 10-07 NPV
Your division is considering two investment projects, each of which requires an up-front expenditure of $19 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%? Round your answers to the nearest dollar.
Project A $
Project B $
What are the two projects' net present values, assuming the cost of capital is 10%? Round your answers to the nearest dollar.
Project A $
Project B $
What are the two projects' net present values, assuming the cost of capital 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 %
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
Study Help