Question
A company has a 13% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows:What is each project's
A company has a 13% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows:What is each project's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations.
0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 |
Project A | -$300 | -$387 | -$193 | -$100 | $600 | $600 | $850 | -$180 |
Project B | -$400 | $134 | $134 | $134 | $134 | $134 | $134 | $0 |
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 B:
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:
Project B:
From your answers to parts a-c, which project would be selected?
Project AProject B
If the WACC was 18%, which project would be selected?
Project A / Project B
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% | $ fill in the blank 10 | $ fill in the blank 11 |
5 | $ fill in the blank 12 | $ fill in the blank 13 |
10 | $ fill in the blank 14 | $ fill in the blank 15 |
12 | $ fill in the blank 16 | $ fill in the blank 17 |
15 | $ fill in the blank 18 | $ fill in the blank 19 |
18.1 | $ fill in the blank 20 | $ fill in the blank 21 |
24.51 | $ fill in the blank 22 | $ fill in the blank 23 |
Calculate the crossover rate where the two projects' NPVs are equal. Round your answer to two decimal places. Do not round your intermediate calculations.
fill in the blank %
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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