Question

Your division is considering two projects with the following cash flows (in millions):

0

1

2

3

Project A	-$16	$7	$9	$10
Project B	-$26	$14	$20	$11

1. What are the projects' NPVs assuming the WACC is 5%? Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to two decimal places.
   Project A:    $_____ million
   Project B:    $_____ million

   What are the projects' NPVs assuming the WACC is 10%? Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to two decimal places.
   Project A:  $______ million
   Project B:  $______ million

   What are the projects' NPVs assuming the WACC is 15%? Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to two decimal places.
   Project A:  $______ million
   Project B:  $______ million

2. What are the projects' IRRs assuming the WACC is 5%? Do not round intermediate calculations. Round your answer to two decimal places.
   Project A: ______ %
   Project B: ______ %

   What are the projects' IRRs assuming the WACC is 10%? Do not round intermediate calculations. Round your answer to two decimal places.
   Project A:______    %
   Project B:______    %

   What are the projects' IRRs assuming the WACC is 15%? Do not round intermediate calculations. Round your answer to two decimal places.
   Project A:______    %
   Project B:______    %

3. If the WACC was 5% and A and B were mutually exclusive, which project would you choose? (Hint: The crossover rate is 48.57%.)
   -Select-Project A, Project B, Neither A, nor B

   If the WACC was 10% and A and B were mutually exclusive, which project would you choose? (Hint: The crossover rate is 48.57%.)
   -Select-Project A, Project B, Neither A, nor B

   If the WACC was 15% and A and B were mutually exclusive, which project would you choose? (Hint: The crossover rate is 48.57%.)
   -Select-Project A, Project B, Neither A, nor B

Answer 1

Solution :-

Note :- There is no diffrence on IRR of WACC so in Point B at WACC 5% , 10 % , 15% :- IRR should be Same

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