ament 7- Chapter 10 eBook NPV and IRR Analysis Cummings Products Company is considering two mutually exclusive Investments whose expected net cash flows are as follows: Expected Net Cash Flows Project A Project B Year 0 -$350 -$620 Problem 10-22 (Economic Life): 100% Correct 1 -528 210 2 -219 210 3 - 150 210 4 1,100 210 5 820 210 6 990 210 -325 210 B 7 a. Select the correct graph for NPV profiles for Projects A and B. A VPV (5) VP (5) 1400 1400 1200+ 1200+ 1000+ 10001 800 Project A 800 6001 600 400 Project B 400 200+ 2001 VPVS) 1400 1200 1000 Project B 8001 Project A 600+ Project 400 200 Project B 20 costoranlands 30 -5 -200 -400 20 -5 -2001 -4001 cost or callants *200 center cailored 20 25 30 -400 D VPVC5) 14001 12007 Ang.cengage.com a Sea MINDTAP ment 7- Chapter 10 The correct graph is graph A : b. What is each project's IRR? Do not round intermediate calculations. Round your answers to two decimal places, Project A: Project B: % C. Calculate the two projects' NPVs, if each project's cost of capital was 10%. Do not round intermediate calculations. Round your answers to the neare Project A: $ Project B: $ Which project, If either, should be selected? Project A. should be selected Calculate the two projects' NPVs, If each project's cost of capital was 18%. Do not round intermediate calculations. Round your answers to the nearest Project A: $ Project B: $ What would be the proper choice? Project is the proper choice. d. What is each project's MIRR at a cost of capital of 10%? (Hint: Consider Period 7 as the end of Project B's life.) Do not round intermediate calculations. Round your answers to two decimal places. Project A: % Project : % What is each project's MIRR at a cost of capital of 18%? (Hint: Consider Period 7 as the end of Project B's life.) Do not round Intermediate calculations Round your answers to two decimal places. Project A: Project B: e. What is the crossover rate? Do not round Intermediate calculations. Round your answer to two decimal places. What is its significance? 1. If the cost of capital is less than the crossover rate, both the NPV and IRR methods lead to the same project selections. ament 7- Chapter 10 eBook NPV and IRR Analysis Cummings Products Company is considering two mutually exclusive Investments whose expected net cash flows are as follows: Expected Net Cash Flows Project A Project B Year 0 -$350 -$620 Problem 10-22 (Economic Life): 100% Correct 1 -528 210 2 -219 210 3 - 150 210 4 1,100 210 5 820 210 6 990 210 -325 210 B 7 a. Select the correct graph for NPV profiles for Projects A and B. A VPV (5) VP (5) 1400 1400 1200+ 1200+ 1000+ 10001 800 Project A 800 6001 600 400 Project B 400 200+ 2001 VPVS) 1400 1200 1000 Project B 8001 Project A 600+ Project 400 200 Project B 20 costoranlands 30 -5 -200 -400 20 -5 -2001 -4001 cost or callants *200 center cailored 20 25 30 -400 D VPVC5) 14001 12007 Ang.cengage.com a Sea MINDTAP ment 7- Chapter 10 The correct graph is graph A : b. What is each project's IRR? Do not round intermediate calculations. Round your answers to two decimal places, Project A: Project B: % C. Calculate the two projects' NPVs, if each project's cost of capital was 10%. Do not round intermediate calculations. Round your answers to the neare Project A: $ Project B: $ Which project, If either, should be selected? Project A. should be selected Calculate the two projects' NPVs, If each project's cost of capital was 18%. Do not round intermediate calculations. Round your answers to the nearest Project A: $ Project B: $ What would be the proper choice? Project is the proper choice. d. What is each project's MIRR at a cost of capital of 10%? (Hint: Consider Period 7 as the end of Project B's life.) Do not round intermediate calculations. Round your answers to two decimal places. Project A: % Project : % What is each project's MIRR at a cost of capital of 18%? (Hint: Consider Period 7 as the end of Project B's life.) Do not round Intermediate calculations Round your answers to two decimal places. Project A: Project B: e. What is the crossover rate? Do not round Intermediate calculations. Round your answer to two decimal places. What is its significance? 1. If the cost of capital is less than the crossover rate, both the NPV and IRR methods lead to the same project selections