Net Present Value
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10-2
You division is considering two investment projects, each of which requires and up front expenditure of $15 million. You estimate that the investments will produce the following net cash flow:
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 10%, 5%, 15%?
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Solution Summary
The solution explains how to calculate the net present value of the projects.
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NPV can be calculated using the NPV function.
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