Question: Year A B 0 $4,000,000 $4,000,000 $2,000,000 $1,000,000 2 $1,500,000 $1,500,000 $ 1,250,000 $1,700,000 4 $1,000,000 $2,400,000 a. Estimate the NPV of each project, assuming

Year A B 0 $4,000,000 $4,000,000 $2,000,000
Year A B 0 $4,000,000 $4,000,000 $2,000,000 $1,000,000 2 $1,500,000 $1,500,000 $ 1,250,000 $1,700,000 4 $1,000,000 $2,400,000 a. Estimate the NPV of each project, assuming a cost of capital of 10%. Which is the better project? b. Estimate the IRR for each project. Which is the better project? c. What reinvestment rate assumptions are made by each of these rules? Can you show the effect on future cash flows of these assumptions

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