In: Finance
A company has a 12% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows: (PLEASE ANSWER FULL QUESTIONS)
0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 |
Project A | -$300 | -$387 | -$193 | -$100 | $600 | $600 | $850 | -$180 |
Project B | -$400 | $131 | $131 | $131 | $131 | $131 | $131 | $0 |
What is each project's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations.
Project A: $
Project B: $
What is each project's IRR? Round your answer to two decimal places.
Project A: %
Project B: %
What is each project's MIRR? (Hint: Consider Period 7 as the end of Project B's life.) Round your answer to two decimal places. Do not round your intermediate calculations.
Project A: %
Project B: %
From your answers to parts a-c, which project would be selected?
_________Project AProject B
If the WACC was 18%, which project would be selected?
_________Project AProject B
Construct NPV profiles for Projects A and B. Round your answers to the nearest cent. Do not round your intermediate calculations. Negative value should be indicated by a minus sign.
Discount Rate | NPV Project A | NPV Project B |
0% | $ | $ |
5 | $ | $ |
10 | $ | $ |
12 | $ | $ |
15 | $ | $ |
18.1 | $ | $ |
23.54 | $ | $ |
Calculate the crossover rate where the two projects' NPVs are equal. Round your answer to two decimal places. Do not round your intermediate calculations.
%
What is each project's MIRR at a WACC of 18%? Round your answer to two decimal places. Do not round your intermediate calculations.
Project A: %
Project B: %