Question
A company has a 13% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows: 0 1 2
A company has a 13% 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 | $135 | $135 | $135 | $135 | $135 | $135 | $0 |
What is each project's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations.
Project A $ 162.48
Project B $ 134.67
What is each project's IRR? Round your answer to two decimal places.
Project A %18.10
Project B %24.29
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 % need this anaswer
Project B %17.73
If the WACC was 18%, which project would be selected? -Select-Project AProject BItem 8
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% | $ 890 | $ 405 |
5 | 540.09 | 280.22 |
10 | 283.34 | 182.96 |
12 | 200.41 | 150.04 |
15 | 92.96 | 105.91 |
18.1 | -.09 | 65.97 |
24.29 | -143.39 | .02 |
Calculate the crossover rate where the two projects' NPVs are equal. Round your answer to two decimal places. Do not round your intermediate calculations. % need this answer
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 % need this answer
Project B % need this answer
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