A company has a 11% 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$300-$387-$193-$ 100$600$600$850-$180 A Project405$134 $134 $ 134 $134$134$134 $0 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 Open spreadsheet a. What is each project's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations. Project A: $ Project B: $ b. What is each project's IRR? Round your answer to two deecimal places Project A % Project B % c. 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 % d. From your answers to parts a-c, which project would be selected? If the WACC was 18%, which project would be selected? e. 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 NPV NPV Discount Project Project Rate A 0% $ $ 5 10 12 $ 15 $ 18.1 23.97 $ f. Calculate the crossover rate where the two projects' NPVS are equal. Round your answer to two decimal places. Do not round your intermediate calculations g. What is each project's MIRR at a WACC of 18%? Round your answer to two decimal places. Do not round your intermediate calculations. Project A: % Project B % 6 A B C D G I J K N O Capital budaetina criteria 11.00 % WACC 0. 1 4. 5. 6. $850 $180 $300 $100 Proiect A -S387 $193 $600 $600 Proiect B -S405 S134 $134 $134 $134 $134 $134 S0 1 Proiect NPV Calculations: Formulas #N/A 2 NPVA 3 4 NPVR 5 6 Proiect IRR Calculations: 7 IRRA #N/A #N/A 9 IRRA #NIA 1 Proiect MIRR Calculations: 2 MIRRA #N/A. 3 4 Alternativelv. MIRRA can be calcu 0 1 3 -$193 -$100 4 S600 5 $600 6 7 $300 $850 -$180 6 Proiect A 7 8 PV of Year 1 Outlow PV of Year 2 Outflow -S387 Formulas #N/A #N/A #NIA #NIA PV of Year 7 Outlow 2 Formulas #N/A #N/A #N/A FV of Year 6 Inflaw atY FV of Year 5 Inflow at Y FV of Year 4 Inflow at Y 4 #N/A Sum of Inflow FVs #N/A 6 Sum of Outflow PVs 8 N PV 0 PMT FV 7 $0.00 0 $0.00 Formulas 2 YR MIRRA #N/A 4 MIRRA #N/A 5 6 Alternativelv. MIRRD can be calcu 7 Prolect B 0 4. $134 5 $134 50 6. 7 $405 $134 $134 $134 $134 Formulas #N/A #N/A #N/A #N/A #N/A #N/A FV of Year 6 Inflow atY FV of Year 5 Inflow at Y EV of Year 4 Inflow at Y FV of Year 3 Inflow at Y FV of Year 2 Inflow at Y FV of Year 1 Inflow at Y 1 3 4 6 8 Sum of Outflaw PVs #N/A #N/A Sum of Inflow FVs N 1 PV PMT 3 FV 4 IYR MIRRA 5 Proiect Acceptance: WACC RAcceot 7 $0.00 Formulas $0.00 #N/A 11.00% #N/A 0 WACC 1 NPVA 2 NPVR 3 Acceot 4 18.00% $2.66 $63.68 #N/A 74 75 NPV Profiles: 76 Discount Rates Discount R NPVA $2.66 NPVA NPVR $63.68 NPVB $2.66 $63.68 77 #N/A #N/A #N/A #N/A #N /A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A 0% 5.00% 10.00% 12.00% 15.00% 18.10% 23.97% 0% 5.00% 10.00% 12.00% 15.00% 18.10% 23.97% 79 NPV Profiles $1.20 90 91 $1.00 $0.80 93 94 $0.60- $0.40 97 98 99 $0.20 100 $0.00 101 15.00 % 18.10 % 23.97% 0% 5.00% 10.00% 12.00% 102. 103 104 Calculation of Crossover Rate: 105 106 Proiect A. 107 108 Proiect B 0 -$300 2 3 -$100 5 $600 6 7 $850 -$180 |-$387 -$193 $600 -$405 $134 $134 $134 $134 $134 $134 $0 109 110 Proiect Delta #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A 111 112 113 Crossover Rate = IRR. 114 115 Proiect MIRR Calculations at WAC #N/A 116 WACC 117 118 MIRRA 119 MIRRB 120 121 18.00% #N/A #N/A
