5 Viden A-Z Excel Online Structured Activity: NPV profiles d A company is considering two mutually exclusive expansion plans. Plan A requires a $39 million expenditure on a large-scale Integrated plant that would provide expected cash flows of $6.23 million per year for 20 years, Plan B requires a $12 million expenditure to build a somewhat less efficient, more labor Intensive plant with an expected cash flow of $2.69 million per year for 20 years. The firm's WACC IN 11%. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. HT Open spreadsheet N a. Calculate each project's NPV. Round your answers to two decimal places. Do not round your intermediate calculations, Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Plan A: million Plan B: 5 21.96 million Calculate each project's IRR. Round your answer to two decimal places. Plan A: % Plan B: % b. By graphing the NPV profiles for Plan A and Plan B, approximate the crossover rate to the nearest percent. % c. Calculate the crossover rate where the two projects' NPVs are equal. Round your answer to two decimal places. 9 d. Why is NPV better than IRR for making capital budgeting decisions that add to shareholder value? The input in the box below will not be graded, but may be reviewed and considered by your instructor, The IRR evaluation method assumes that cash flows from the project are reinvested at the same rate equal to the IRR. However, in reality the reinvested cash flows may not necessarily generate a return equal to the IRR. Thus, the modified IRR approach makes a more reasonable assumption other than the project's IRR. Cold Goose Metal Works Inc. is analyzing a project that requires an initial investment of $3,000,000. The project's expected cash laws are Year Cash Flow Year: $325,000 -200,000 Year 2 Year 3 500,000 450,000 Year 4 Cold Goose Metal Works Inc.'s WACC is 10%, and the project has the same risk as the firm's average project. Calculate this project's modified internal rate of return (MIRR). Cold Goose Metal Works Inc.'s WACC is 10%, and the project has the same risk as the firm's average project. Calculate this project's modified Internal rate of return (MIRR). O 17.06% 0-17.98% 20.86 O 22.750 If Cold Goose Metal Works Inc.'s managers select projects based on the MIRR criterion, they should this independent project reject Which of the following statements about the relationship between the IRR and the MIRR is correct? accept A typical firm's IRR will be equal to its MIRR. A typical firm's IRR will be greater than its MIRR O A typical firm's IRR will be less than its MIRR