Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Transcribed Image Text: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
7,000,000
a. What are the two projects' net present values, assuming the cost of capital is 5%? Do not round intermediate calculations. 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%? Do not round intermediate calculations. 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%? Do not round intermediate calculations. Round your
answers to the nearest dollar.
Project A: $
Project B: $
b. What are the two projects' IRRS at these same costs of capital? Do not round intermediate calculations. Round your answers to two
decimal places.
Project A:
%
Project B:
%
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