3. Your division is considering two investment projects, each of which requires an up-front expenditure of $25 million. You following after-tax cash flows (in millions of dollars): D 3. Your division is considering two investment projects, each of which requires an up-front expenditure of $25 million. You estimate that the cost of 1 capital is 10% and that the investments will produce the following after-tax cash flows in millions of dollars): Project A -25 Project B -25 10 20 10 a. If the two projects are independent and the cost of capital is 10%, which project or projects should the firm undertake? NPVA NPV, 14 17 b. If the two projects are mutually exclusive and the cost of capital is 5%, which project should the firm undertake? NPVA NPV,= 24 c. If the two projects are mutually exclusive and the cost of capital is 15%, which project should the firm undertake? NPV, - NPV- 30 d. What is the crossover rate? Type here to search o te 4 20 10 a. If the two projects are independent and the cost of capital is 10%, which project or projects should the firm undertake? NPVA- NPV = 17 b. If the two projects are mutually exclusive and the cost of capital is 5%, which project should the firm undertake? 18 NPVA- NPV = 24 c. If the two projects are mutually exclusive and the cost of capital is 15%, which project should the firm undertake? NPVA NPV = 28 29 30 d. What is the crossover rate? Year Cash Flow Differential 1 2 3 o Et . Ready Type here to search 30 d. What is the crossover rate? Year Cash Flow Differential 0 2 Crossover rate 41 e. If the cost of capital is 10%, what is the modified IRR (MIRR) of each project? 43 MIRRA 44 MIRR) = 45 46 1. What is the discounted payback period for each of the projects? Year Project A CFs Discounted CFs Cumulative CFS Year Project B Discounted CFs Cumulative CFS 1 2 3 Ready Type here to search 3 Crossover rate= 41 e. If the cost of capital is 10%, what is the modified IRR (MIRR) of each project? 42 re 43 MIRRA 44 MIRRA = 45 46 1. What is the discounted payback period for each of the projects? 47 Year Project A CFs Discounted CFs Cumulative CFS -25 Year Project B Discounted CFs Cumulative CFS Discounted Payback Discounted Payback - 1 2 3 O te Ready Type here to search