Project A and project B have a cost of $24,000,000 today.Project A will have cas

Question

Project A and project B have a cost of $24,000,000 today.Project A will have cash flows of $10,000,000 per year for three years whie project B will have cash flows of $15,000,000 the first year,$10,000,000 the second year and $7,000,000 the thrid year.Calculate the NPV and the IRR for project B using 12% cost of capital and show your work by using two of the following methods :(1) using teh formula,(2) identifying all variables using the calculator's function keys,(3) using the calculator to calculate NPV and IRR. Note this project has different cash flows.

Explanation / Answer

year A B DF   @ 12% PV A PV B 0 -24000000 -24000000 1 -24000000 -24000000 1 10000000 15000000 0.892857 8928571.4 13392857 2 10000000 10000000 0.797194 7971938.8 7971938.8 3 10000000 7000000 0.71178 7117802.5 4982461.7 NPV 18312.682 2347257.7 IRR 12.044% 18.459%

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