A company has a 12% 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: -405, 135, 135, 135, 135, 135, 135, 0

a. What is each project's NPV?

project A $

project B $

b. What is each project's IRR?

project A $

project B $

c. What is each project's MIRR?

project A $

project B $

d. From your answers to Parts a, b, and 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

discount rate NPV PLAN B. NPV PLAN B

0%

5

f. Calculate the crossover rate where the two projects' NPVs are equal.

g. What is each project's MIRR at a WACC of 18%