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A company has a 12% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows: 2 3 4
A company has a 12% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows: 2 3 4 5 6 7 Project -$300 - $387 -$193 -$100 $600 $600 $850 -$180 Project - $400 $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. X Open spreadsheet a. What is each project's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations. Project A: $ 200.41 Project B: $ 150.93 b. What is each project's IRR? Round your answer to two decimal places. Project A: 18.10 % Project B: 24.51 % 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: 15.10 % Project B: 17.24 % d. From your answers to parts a-c, which project would be selected? Project A 90 If the WACC was 18%, which project would be selected? Project B 40 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 Project B $ 404 $ $ Discount Rate NPV Project A $ 890 $ 540.0s $ 283.34 $ 200.410 $ 92.96 $ -0.09 24.51 $ -147.60 4 $ 4 4
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