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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: 0 1 2
A company has a 12% 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 A -$300 -$387 -5193 -$100 $600 $600 $850 -$180 Project B - $400 $134 $134 $134 $134 $134 $134 $0 a. What is each project's NPV? Negative values, if any, should be indicated by a minus sign. Do not round Intermediate calculations. Round your answers to the nearest cent. . . Project A: $ 200.41 Project B: $ b. What is each project's IRR? Do not round intermediate calculations. Round your answers to two decimal places. . . Project A: 18.10 % Project B: : c. What is each project's MIRR? (Hint: Consider Perlod 7 as the end of Project B's life.) Do not round Intermediate calculations. Round your answers to two decimal places. Project A: 15.10 % Project B: 96 d. From your answers to parts a-c, which project would be selected? Project Av If the WACC was 18%, which project would be selected? ? Project Bv e. Construct NPV profiles for Projects A and B. If an amount is zero, enter O. Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest cent. Discount Rate NPV Project A A NPV Project B 0% $ 890 $ 404 5 540.09 280.14 10 283.34 183.60 12 200.41 150.93 15 92.96 107.12 18.1 -.09 67.48 24.51 -147.63 -0.02 . ' . f. Calculate the crossover rate where the two projects' NPVs are equal. Do not round intermediate calculations. Round your answer to two decimal places. 14.28 % g. What is each project's MIRR at a WACC of 18%? Do not round intermediate calculations. Round your answers to two decimal places. Project A: % Project B: %
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