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An oil-drilling compary must choose between two mutually excluswe extraction projects, and each requires an initial outlay at t=0 of $12.4 million. Under Plan A,

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An oil-drilling compary must choose between two mutually excluswe extraction projects, and each requires an initial outlay at t=0 of $12.4 million. Under Plan A, all the ofl would be extracted in 1 year, producing a cash flow at t=1 of $14,88 million. Under Plan B, cash flows woutd be $2.2034 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 amoune is zero, enter 00. Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations, Round your answers to two decimal places. Wentily each broject's 18R. Do not round intermediate calculations. Round your an uwers to twe decimal places: hojed A : Nojed B: b. Is it logical to assume that the firm would take on all avalable independent, average-risk profects 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 imply that the WMCC is the correct reinvestment rate assumption for a project's cash flows

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