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9. You have just started your summer intemship, and your boss asks you to review a recent analysis that was done to compare two alternative
9. You have just started your summer intemship, and your boss asks you to review a recent analysis that was done to compare two alternative proposals to enhance the firm's manufacturing facility. You find that the prior analysis ranked the proposals acconding their IRR, and recommended the highest IRR option, Proposal A. You are concemed and decide to redo the analysis using NPV to determine whether this recommendation was appropriate. But while you are confident the IRRs were computed correctly; it seems that some of the underlying data regarding the cash flows that were estimated for each proposal was not included in the report. For Proposal B, you cannot find information regarding the total initial investment that was required in year 0 . Here is the information you have (all amounts are in million $ ): Suppose the appropriate cost of capital for each alternative is 10%. Using this information, determine the NPV of each project. a. NPV for proposal A=$119.84 million; NPV for proposal B=$147.43 million. b. NPV for proposal A=$128.81 million; NPV for proposal B=$161.52 million. c. NPV for proposal A=$119.84 million; NPV for proposal B=$151.52 million. d. NPV for proposal A=$128.81 million; NPV for proposal B=$139.76 million. e. None of the above
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