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An oil-drilling company must choose between two mutually exclusive extraction projects; and each requires an initial outiay at t=0 of $11:6 million. Under Pian A,

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An oil-drilling company must choose between two mutually exclusive extraction projects; and each requires an initial outiay at t=0 of $11:6 million. Under Pian A, att the oif woutd be extracted in 1 year, producing a cash flow at t=1 of $13.92 million. Under Plan B, cash flows would be $2.0612 million per year for 20 years, The firm's WACC is 13%. 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 as 10.55, If an amount is zero, enter " 0 ". Negative values, if any, should be indicated by a minus sign. Do not found intermediate calculations, Round your answers to two decimal places. Identify each project's IRR. Do not round intermediate calculations. Round your answers to two decimal pleces. Find the crossover rate. Do not round intermedlate calculations. Round your answer to two decimal places. % b. Is it logical to assume that the firm would take on all avaliable independent, average-risk projects with returns greater than 1394 b. Is it logical to assume that the firm would take on all avaitable independent, average-risk projects with returns greater than 13% ? If all available projects with returns greater than 13% have been undertaken, does this mean that cash flows from past investments have an opportunity cost of only 13%, because all the company can do with these cash flows is to replace money that has a cost of 13% ? Does this impiy that the WACC is the correct reinvestrent rate assumption for a project's cash flows

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