A company is considering two mutually exclusive expansion plans. Plan A requires a $$39$ million expenditure on a large$-$scale integrated plant that would

provide expected cash flows of $$6\mathrm{.}23$ million per year for $20$ years. Plan B requires a $$13$ million expenditure to build a somewhat less efficient, more labor$-$

intensive plant with an expected cash flow of $$2\mathrm{.}91$ million per year for $20$ years. The firm's WACC is $11\%.$ 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.

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 $10\mathrm{.}55.$

Plan $A$:$$,$ million

Plan B: 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 IRR 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.