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An oil-drilling company must choose between two mutually exclusive extraction projects, and each requires an initial outlay at t - 0 of $12 million.
An oil-drilling company must choose between two mutually exclusive extraction projects, and each requires an initial outlay at t - 0 of $12 million. Under Plan A, all the oil would be extracted in 1 year, producing a cash flow at t 1 of $14.4 million. Under Plan B, cash flows would be $2.1323 million per year for 20 years. The firm's WACC is 12.8%. a. Construct NPV profiles for Plans A and B. Enter your answers in millions. For example, an answer of $10,550,000 should be entered = 10.55. If an amount is zero, enter "0". Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to two decimal places. Discount Rate 0% $ NPV Plan A NPV Plan B million 10 12 15 17 20 5 * * * * million $ * million million million million. million million million million million million ** million million a calculations, Round your answers to two decimal places. million million 15 million million 17 million million million 20 million Identify each project's IRR. Do not round intermediate calculations. Round your answers to two decimal places. Project A: % Project B: % Determine the crossover rate. Approximate your answer to the nearest whole number. % ne all susilahla indenendent averane-risk nroiects with returns greater than 12
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