Question
A company has a 11% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows: Project A -$300
A company has a 11% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows:
Project A -$300 -$387 -$193 -$100 $600 $600 $850 -$180
Project B -$400 $133 $133 $133 $133 $133 $133 $0
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What is each project's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations.
Project A: $
Project B: $
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What is each project's IRR? Round your answer to two decimal places.
Project A:
Project B:
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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:
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From your answers to parts a-c, which project would be selected?
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If the WACC was 18%, which project would be selected?
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Construct NPV profiles for Projects A and B. Round your answers to the nearest cent. Do not round your intermediate calculations. Negative value should be indicated by a minus sign.
Discount Rate NPV Project A NPV Project B 0% $ $ 5 $ $ 10 $ $ 12 $ $ 15 $ $ 18.1 $ $ 24.18 $ $ -
Calculate the crossover rate where the two projects' NPVs are equal. Round your answer to two decimal places. Do not round your intermediate calculations.
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