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 -$193 -$100 $600 $600 $850 - $180 Project B -$405 $133 $133 $133 $133 $133 $133 $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. What is each project's IRR? Round your answer to two decimal places. Project A % Project : We 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: Proiect 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. Discount Rate NPV Project A NPV Project B 0% $ $ 5 $ $ 10 $ $ 12 $ $ 15 $ $ 18.1 $ $ 23.65 $ 1. Calculate the crossover rate where the two projects' NPVs are equal. Round your answer to two decimal places. Do not round your intermediate calculations % 9. 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: % 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. Discount Rate 0% NPV Project A $ NPV Project B $ 5 $ $ 10 $ $ 12 $ $ 15 $ $ 18.1 $ $ 23.65 $ $ 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. % 9. 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: % D 1 Capital budgeting arteria WACC 12.00% 1 2 Project A -5300 7 -$100 5 3000 $800 8 50 Project -5405 $133 $133 $133 $133 $133 $123 50 Free NV Calon NPVA Formis NA NPV. ANA Prolet RR Calculations IRR NA Project MRR Calculations MIRR NA Alternative MRR, can be calculated as Project A 0 -5300 1 3387 $190 -$100 4 $800 5000 6 $850 7 -$180 Fomus PV of Year 1 Outflow 6 Project $300 37 $180 -$100 $800 5000 $180 8 PV of Year 1 Outflow 9 PV of Year 2 Out 30 PV of Year 3 Outlow 31 PV of Year 7 Outfow 32 Fomu NA ANA INA INA Formulas ANA Formulas 36 Surn of Outflow PV's 37 38 N 39 PV 40 PMT 41 FV 42 WYR - MRRA 50.00 0 $0.00 MNIA 44 MRR 45 46 Alervey, MRR, can be used as 0 3405 4 $130 5 $123 7 30 $733 $130 Formula 48 Project 49 50 51 52 Sum of Outflow PV's ONIA IN PY Formu FV VYR-MRR $0.00 0 $0.00 ANA Project Acopios WACC Accept NA WACC NPVA NPV, Accept 90018 NA NPVPhone Discount Rates NPVA NPV Discount NPV NPV $2.86 $200 580 ENIA 0% 5.00% 10.00% 42.00% 15 00 18.10% 23.65 ON 5.00% 10.00 12.00% 15.00 18.10% 23 65 NA WNIA NIA NA NA NA NIA NA NA 86 32 88 NPV Profiles $1.20 83 $1.00 SO 30 21 92 33 24 25 26 32 Sa.so 50.0 12.00% 15.00 18.10N HUN $6.20 9 00 31 $0.00 5.00 32 3 44 Cabucaion of Crossover Rate 15 6 Project A 7 8 Project 9 0 Project Delta 1 1 o -$300 2 -5193 3 -$100 4 $500 5 3000 8 S880 $180 $405 $133 $133 $130 $133 $133 5133 50 NA SNA INA NA INA 3 Crossover Rate RR B12 fi D E F UNA UNA UNA HINA ANIA #NA 110 Project Delta 111 112 13 Crossover Rate = IRR 14 15 Project MIRR Calculations at WACC = 18% 16 WACC 17 18 MIRRA 19 MIRR 20 91 2 3 18.00% #N/A #NA 5 6 3
