An oil-drilling company must choose between two mutually exclusive extraction projects, and each requires an initial outlay at t = 0 of $12.8 million. Under Plan A, all the oil would be extracted in 1 year, producing a cash flow at t = 1 of $15.36 million. Under Plan B, cash flows would be $2.2744 million per year for 20 years. The firm's WACC is 11.7%.

1. Construct NPV profiles for Plans A and B. Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 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		NPV Plan A	NPV Plan B
   0	%	$ ? million	$ ? million
   5		? million	? million
   10		? million	? million
   12		? million	? million
   15		? million	? million
   17		? million	? million
   20		? million	? million

   Identify each project's IRR. Do not round intermediate calculations. Round your answers to two decimal places.

   Project A: ? %

   Project B: ? %

   Find the crossover rate. Do not round intermediate calculations. Round your answer to two decimal places.

   %

2. Is it logical to assume that the firm would take on all available independent, average-risk projects with returns greater than 11.7%?

   -Select-YesNoItem 18

   If all available projects with returns greater than 11.7% have been undertaken, does this mean that cash flows from past investments have an opportunity cost of only 11.7%, because all the company can do with these cash flows is to replace money that has a cost of 11.7%?

   -Select-YesNoItem 19

   Does this imply that the WACC is the correct reinvestment rate assumption for a project's cash flows?

   -Select-YesNo