Question
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 | -$193 | -$100 | $600 | $600 | $850 | -$180 |
Project B | -$400 | $133 | $133 | $133 | $133 | $133 | $133 | $0 |
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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: $ ?
Project B: $ ?
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What is each project's IRR? Do not round intermediate calculations. Round your answers to two decimal places.
Project A: ? %
Project B: ? %
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What is each project's MIRR? (Hint: Consider Period 7 as the end of Project B's life.) Do not round intermediate calculations. Round your answers to two decimal places.
Project A: ? %
Project B: ? %
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Construct NPV profiles for Projects A and B. If an amount is zero, enter 0. Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest cent.
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Discount Rate NPV Project A NPV Project B 0% $ ? $ ? 5 ? ? 10 ? ? 12 ? ? 15 ? ? 18.1 ? ? 24.18 ? ? -
Calculate the crossover rate where the two projects' NPVs are equal. Do not round intermediate calculations. Round your answer to two decimal places.
? %
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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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