Question
13 pt 1 CAPITAL BUDGETING CRITERIA A company has a 13% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the
13 pt 1
CAPITAL BUDGETING CRITERIA
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 |
What is each project's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations.
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. Do not round your intermediate calculations.
Project A %
Project B %
From your answers to parts a-c, which project would be selected? If the WACC was 18%, which project would be selected?
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