NPV
Your division is considering two investment projects, each of which requires an up-front expenditure of $17 million. You estimate that 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 | 6,000,000 |
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: $
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: %
Net present value is calculated using a financial calculator by inputting the below:
The net present value of cash flows is $13,156,570.56.
Project B
Net present value is calculated using a financial calculator by inputting the below:
The net present value of cash flows is $16,300,939.42.
Net present value is calculated using a financial calculator by inputting the below:
The net present value of cash flows is $9,927,122.46.
Project B
Net present value is calculated using a financial calculator by inputting the below:
The net present value of cash flows is $13,954,169.80.
Net present value is calculated using a financial calculator by inputting the below:
The net present value of cash flows is $7,190,022.19.
Project B
Net present value is calculated using a financial calculator by inputting the below:
The net present value of cash flows is $11,897,838.42.
d.Project A
Internal rate of return is calculated using a financial calculator by inputting the below:
The IRR of project is 33.54%.
Project B
Internal rate of return is calculated using a financial calculator by inputting the below:
The IRR of project is 65.92%.
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