Question

ANSWER ALL 3 SECTIONS a. b. c!!!!!!!!!pleae

NPV Your division is considering two projects with the following cash flows (in millions): 0 1 2 3 Project A -$20 $5 $9 $12 Project B -$13 $8 $7 $ What are the projects' NPVs assuming the WACC is 5%? Round your answer to two decimal places. Do not round your intermediate calculations. Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative value should be indicated by a minus sign. Project A    $   million Project B    $   million What are the projects' NPVs assuming the WACC is 10%? Round your answer to two decimal places. Do not round your intermediate calculations. Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative value should be indicated by a minus sign. Project A    $   million Project B    $   million What are the projects' NPVs assuming the WACC is 15%? Round your answer to two decimal places. Do not round your intermediate calculations. Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative value should be indicated by a minus sign. Project A    $   million Project B    $   million What are the projects' IRRs assuming the WACC is 5%? Round your answer to two decimal places. Do not round your intermediate calculations. Project A   % Project B   % What are the projects' IRRs assuming the WACC is 10%? Round your answer to two decimal places. Do not round your intermediate calculations. Project A   % Project B   % What are the projects' IRRs assuming the WACC is 15%? Round your answer to two decimal places. Do not round your intermediate calculations. Project A   % Project B   % If the WACC was 5% and A and B were mutually exclusive, which project would you choose? (Hint: The crossover rate is 3.86%.)   -Select-Project AProject BNeither A, nor BItem 13 If the WACC was 10% and A and B were mutually exclusive, which project would you choose? (Hint: The crossover rate is 3.86%.)   -Select-Project AProject BNeither A, nor BItem 14 If the WACC was 15% and A and B were mutually exclusive, which project would you choose? (Hint: The crossover rate is 3.86%.)   -Select-Project AProject BNeither A, nor BItem 15

Answer 1

NPV of both Project at different discount rate is calculated in excel and screen shot provided below:

At 5% discount rate NPV of project A is $3.29 and NPV of project B is $0.97, At 10% discount rate NPV of project A is $1.00 and NPV of project B is $0.06, and At 15% discount rate NPV of project A is -$0.96 and NPV of project B is -$0.0.75,

IRR calculation does not use discount rate. So IRR of all project is calculated in excel and screen shot provided below:

IRR of project A is 12.46% and IRR of project B is 10.34%.

c.

At 10% discount rate NPV of project A is $1.00 and NPV of project B is $0.06. If both project is mutually exlusive then Project A should be accepted because NPV of project A is higher than NPV of project B.

d.

At 15% discount rate NPV of project A is -$0.96 and NPV of project B is -$0.0.75. Since, both project has negative NPV at 15% discount rate, so both project should be rejected. So Neither of project is accepted at 15% discount rate.