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 $6.23 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 $2.91 million per year for 20 years. The firm's WACC is 9%. 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. .. Numeric field 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: $ 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. % 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 Why is NPV etter than IRR for your instructor. B D D E F G G H 1 1 3 K L M M N 0 0 Q R S T U U V w 9.00% D $39.00 1 $6.23 2 $6.23 3 56.23 4 S6.23 $ 5 6 7 58.23 $6.23 $6.23 $ $ 8 $6.23 $ 9 S6.23 10 $6.23 11 $6.23 12 58.23 13 $6.23 14 $ $6.23 15 $6.23 $ 16 $6.23 17 $6.23 18 S6 23 19 58.23 20 $0.23 A 1 1 NPV profiles 2 3 WACC 4 5 Dollars inwone) 6 Plan A A 7 B Plan B 9 10 Project MPV Calculations: 11 NPVA 12 NPV. 13 14 Prolet RR Calculations: Prylace 15 TRR $13.00 $2.91 $2.91 S2.91 $2.91 82.91 $2.91 $2.91 32.91 82.91 $2.91 32.91 $2.91 $2.91 32.91 32.91 32.91 $2.91 $2.91 $2.91 $2.91 Formulas #NA NNA #N/A #NA 16 IRRE 17 18 NPV Profiles: 19 Discount Rates 20 21 22 23 24 25 26 27 0% 5% 10% 15% 20% 22% 25% NPVA $1.00 $0.00 50.00 50.00 $0.00 $1.00 $0.00 $0.00 NPVA $0.00 S0.00 50.00 50.00 $0.00 SC.00 S0.00 50.00 A B D E F F G H 1 j K L M N 0 P R S T U V W X NPV Profiles 28 29 30 31 $1.00 32 $0.90 101% -5% 15 204. 33 . 34 35 $0.60 36 $0.50 + 37 38 $0.40 39 $0.30 40 $0.20 41 0.10 42 $0.00 13 44 45 Calculation of Crossover Rate: 46 47 Plan A 48 49 Plan B 50 51 Praject Delta 52 Fomulas 53 54 55 Crossover Rate = IRR, 56 57 58 59 1 1 14 0 0 -$3900 2 S0.23 3 $6.23 4 $6.23 5 $6.23 B 7 7 S6 Se 23 6.23 B Se 23 9 $6.23 10 S0.23 11 SA 23 12 $6.23 13 $6.23 15 $6.23 16 $6.23 17 $6.23 18 S6 23 19 S6 23 20 S6 23 $6.23 $13.00 S2.91 2.91 $2.91 $2.91 $2.91 52.91 $2.91 $ S2.91 $2.91 S2.91 S2.91 $2.91 $2.91 $2.91 $2.91 $2.01 $2.91 $2.91 S2.91 S2.91 #N/A #NA #NA #NIA #N/A #NA NA NA NA NA NA # #/ # # =N #N/A #NA #N/A #NIA WNIA #NA #NA #N/A #NA #NA #NA # N Formula NA Sheet1 Calculaban Mode: Aulimwi Varkak State Gender o Mirmant - - 100% +
