Homework answers / question archive / Better Health Inc

Better Health Inc

Finance

Share With

---

Better Health Inc. is evaluating two capital investments, each of which requires an up-front (time 0) expenditure of $1.5 million. The projects are expected to produce the following net cash inflows:

 

Year Project A ($) Project B ($)

1.  500,000     2,000,000

2.  1,000,000    1,000,000

3.  2,000,000    600,000

 

a. What is each project's IRR? 

 

 

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

 

Project A

 

Project B