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11-6 NPV Your division is considering two projects with the following cash flows (in millions): a. What are the projects NPVs assuming the WACC is
11-6 NPV Your division is considering two projects with the following cash flows (in millions):
a. What are the projects NPVs assuming the WACC is 5%? 10%? 15%?
ANSWER b. What are the projects IRRs at each of these WACCs?
ANSWER c. If the WACC was 5% and A and B were mutually exclusive, which project would you choose? What if the WACC was 10%? 15%? (Hint: The crossover rate is 7.81%.)
ANSWER
Project A Project B 0 H -$25 - $20 $5 $10 $10 $9 $17 $6Step by Step Solution
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