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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

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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 3 4 5 6 7 Project A Project B -$300 -$400 -$387 $134 -$193 $134 -$100 $134 $600 $134 $600 $134 $850 $134 -$180 $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: $ 145.94 b. What is each project's IRR? Round your answer to two decimal places. Project A: 18.10 % Project B: 23.97 % 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: 16.34 % Project B: 17.03 % d. From your answers to parts a-c, which project would be selected? Project A If the WACC was 18%, which project would be selected? Project B 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 $ 399 X 0% $ 890 5 $ 540.09 $ 275.15 X 10 $ 283.34 $ 178.6 x 12 $ 200.41 $ 145.93 X 15 $ 92.96 $ 102.12 18.1 $ -0.09 $ 62.48 24.51 $ - 147.63 $ -5.02 X 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: %

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