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Your division is considering two investment projects, each of which requires an up-front expenditure of $20...

  1. Your division is considering two investment projects, each of which requires an up-front expenditure of $20 million. You estimate that the investments will produce the following net cash flows:
  2. 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

  1.        What are the two project’s NPVs assuming the cost of capital is 8%, 14%, 20%?
  2.        What are the two projects’ IRRs at those same costs of capital?

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