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 $133 $133 $133 $133 $133 $133 $0 What is each project's NPV? Round your answer to the nearest cent. 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. Project A  % Project B  % 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 Construct NPV profiles for Plans A and B. Round your answers to the nearest cent. Discount Rate NPV Plan A NPV Plan B 0% $   $   5 $   $   10 $   $   12 $   $   15 $   $   18.1 $   $   24.18 $   $   Calculate the crossover rate where the two projects' NPVs are equal. Round your answer to two decimal places. % What is each project's MIRR at a WACC of 18%? Round your answer to two decimal places. Project A  % Project B  %

Answer 1

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