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A company has a 13% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows: 5 Project A

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A company has a 13% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows: 5 Project A Project B -$300 -$405 0 -Select- 1 -Select- 2 4 + -$387 -$193 -$100 $600 $600 $131 $131 $131 $131 $131 $131 % 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: $ Project B: $ b. What is each project's IRR? Do not round intermediate calculations. Round your answers to two decimal places. Project A: Project B: c. 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: d. From your answers to parts a-c, which project would be selected? % 3 % % 6 If the WACC was 18%, which project would be selected? 7 $850 -$180 $0 If the WACC was 18%, which project would be selected? -Select- e. 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. NPV Project A Discount Rate 0% 5 10 12 15 18.1 23.01 $ % f. Calculate the crossover rate where the two projects' NPVs are equal. Do not round intermediate calculations. Round your answer to two decimal places. $ % NPV Project B 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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