Question

Your division is considering two investment projects, each of which requires an up-front expenditure of $15 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		6,000,000

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: $   

Answer 1

	Project A	Project B
NPV	10059587.41	13897838.42

Workings

Year	Project A	Project B
0	-15000000	-15000000
1	5000000	20000000
2	10000000	10000000
3	20000000	6000000

Off) K Book1 Excel Sign in Comments Tell me what you want to do Share File Formulas Review View Help Home Insert Draw Page Layout Data Insert Delete Format Σ. X A A == 11 General Calibri L Paste Sort & Find 8 Conditional Format as Cell в I BIU A 0 00 0 Styles Filter Select FormattingTable Alignment Editing Clipboard Font Number Styles Cells C8 A В D F Project A Project B 1 Year -15000000 2 0 -15000000 3 1 5000000 20000000 10000000 4 10000000 6000000 5 20000000 6 Project A Project B NPV(15%,C3:C5)+C2 =NPV(15%,D3:D5)+D2 7 NPV 8 9 10 11 12 13 14 15 16