Your division is considering two facility investment projects, each of which requires an upfront expenditure of $25 million. You estimate that the investments will produce the following net cash flows:
Year
Project A
Project B
1
$7,000,000
$21,000,000
2
$12,000,000
$11,000,000
3
$22,000,000
$9,000,000
Instructions:
What are the project's net present values, assuming the cost of capital is 10%, 5%, and 15%?
What does this analysis tell you about the projects?