# Problem 10 7 NPV Your division is considering two investment

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## Problem 10 7 NPV Your division is considering two investment

Problem 10-7
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 \$  5,000,000 \$20,000,000 2 10,000,000 10,000,000 3 20,000,000 7,000,000
1. 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 \$

2. What are the two projects’ IRRs at these same costs of capital? Round your answers to two decimal places.
Project A     %
Project B     %

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Problem 10 7 NPV Your division is considering two investment