A company is considering two mutually exclusive expansion plans. Plan A requires a $40 million expenditure on a large-scale integrated plant that would provide expected cash flows of $6.39 million per year for 20 years. Plan B requires a $13 million expenditure to build a somewhat less efficient, more labor-intensive plant with an expected cash flow of $2.91 million per year for 20 years. The firm's WACC is 10%. 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 ht Open spreadsheet a. Calculate each project's NPV. Round your answers to two decimal places. Do not round your intermediate calculations. Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Plan A: 5 million Plan B: 5 million Calculate each project's IRR. Round your answer to two decimal places. Plan A: % Plan B b. By graphing the NPV profiles for Plan A and Plan B, approximate the crossover rate to the nearest percent. A. c. Calculate the crossover rate where the two projects' NPVs are equal. Round your answer to two decimal places Open spreadsheet a. Calculate each project's NPV. Round your answers to two decimal places. Do not round your intermediate calculations. Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Plan A: million Plan B: 5 million Calculate each project's IRR. Round your answer to two decimal places Plan A: % Plan B: b. By graphing the NPV profiles for Plan A and Plan B, approximate the crossover rate to the nearest percent. c. Calculate the crossover rate where the two projects' NPVs are equal. Round your answer to two decimal places d. Why is NPV better than IR for making capital budgeting decisions that add to shareholder value? The input in the box below will not be graded, but may be reviewed and considered by your instructor Dantzler Corporation is a fast-growing supplier of office products. Analysts project the following free cash flows (FCFS) during the next 3 years, after which FCF is expected to grow at a constant 5% rate. Dantzler's WACC is 10% 0 Year 2 3 FCF (S millions) $8 $23 $59 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 til Open spreadsheet a. What is Dantzler's horizon, or continuing, value? (Hint: Find the value of all free cash flows beyond Year 3 discounted back to Year 3.) Round your answer to two decimal places. Enter your answer in millions. For example, an answer of $13,550,000 should be entered as 13.55. $ million b. What is the firm's value today? Round your answer to two decimal places. Enter your answer in millons. For example, an answer of $13,550,000 should be entered as 13.55. Do not round your intermediate calculations $ million c. Suppose Dantzler has $159 million of debt and 14 million shares of stock outstanding. What is your estimate of the current price per share? Round your answer to two decimal places. Write out your answer completely. For example, 0.00025 million should be entered as 250. $
