ABC Company is analyzing two projects - Project A and Project B. Each project requires an initial investment of $10,000 and has the following projected cash flows: For Project A net cash flows in Years 1 through 3 will $3,200 and cash flows in Years 4 and 5 will be $3,250. For Project B the net cash flows in Years 1 through 4 will be 0 (zero) while the net cash flow projected for Year 5 will be $20,500.

Part 1:

Create the following analysis in a worksheet named 12% Cost of Capital Required: 1. What is each projects calculated Net Present Value (NPV)? 2. What is each project's IRR? 3. What is each project's MIRR assuming reinvestment occurs at the applicable cost of capital? 4. What is the Regular Payback for each project? 5. What is each project's Discounted Payback? 6. What is each projects Profitability Index (PI)? Would it matter if the projects were Mutually Exclusive? 7. Construct NPV Profiles for Project A and Project B over a range of cost of capital from 2% to 20%. 8. Create a graph of the NPV profiles created above. Make sure the graph looks professional and is properly formatted with appropriate axis names and the data being graphed is identified. 9. What is the crossover rate for Project A and Project B? Calculate the exact rate and insert an arrow and data label (with the exact crossover cost of capital percentage) on your graph above identifying the point where the crossover occurs.

Part 2:

Create a NEW worksheet in same file named 18% Cost of Capital and create the following analysis Required: 1. What is each projects revised Net Present Value (NPV)? 2. What is each project's revised IRR? 3. What is each project's revised MIRR using the revised cost of capital as the reinvestment rate?