Question

A company has a 13% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows:

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

1. What is each project's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations.

   Project A $

   Project B $

2. What is each project's IRR? Round your answer to two decimal places.

   Project A  %

   Project B  %

3. 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  %

4. From your answers to parts a-c, which project would be selected?
   -Select-Project AProject BItem 7
   
   If the WACC was 18%, which project would be selected?
   -Select-Project AProject BItem 8
5. 
   
6. 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

7. 
   
8. Calculate the crossover rate where the two projects' NPVs are equal. Round your answer to two decimal places. Do not round your intermediate calculations.
   %

9. 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  %

Answer 1