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    NPV and IRR

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    A company is evaluating two capital investments, each of which requires an up-front (year 0) expenditure of $1.5 million. The projects are expected to produce the following net cash inflows"
    Project 1 Project 2

    Year 1 - $500,000 $2,000,000

    Year 2 -$1,000,000 $1,000,000

    Year 3 -$2,000,000 $600,000

    a. What is the project's IRR?

    b. What is each project's NPV if the opportunity cost of capital is 10 percent? 5 percent? 15 percent?

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    Solution Summary

    The solution explains how to determine the NPV and IRR for the given projects