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An oll-draling company must choose between two mutually exclusive extraction projects, and each requires an initial outioy at t=0 of $11.6milion. Under Pisn A, all

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An oll-draling company must choose between two mutually exclusive extraction projects, and each requires an initial outioy at t=0 of $11.6milion. Under Pisn A, all the ofl would be extrocted in 1 year, producing a cash now ot t=1 of $13.92 mithion, Under Ptan 5 , ossh fows would be $2.0612 million per vear for 20 years. The firm's WACC is 11.8%. a. Construct NPV profles 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 ". Negstive values, if any, shouid be indicated by a minus sign. Do not round intermediate calculotions, Round your answers to two dedimal olaces. Identify each project's IRR. Do not round intermmliate 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. % Is it logical to assume that the firm would take on all avaliable independent, average-risk projects with returns greater than 11.8% ? If all avallable projects with returns greater than 11.8% have been undertaken, does this mean that cash flows from past investments have an opportunit cost of only 11.8%, because all the company can do with these cash flows is to replace money that has a cost of 11.8% ? Identify cach project's IRR. Do not round intermediate calculations. Round your answers to two decimal places. Project A: % Project 8: 96 Find the crossover rate. Do not round intermediate calculations. Round your answer to two declimal places. % b. Is it logical to assume that the firm would take on all avallable independent, average-risk projects with returns greater than 11.8% ? If all avallable projects with returns greater than 11.8% have been undertaken, does this mean that cash flows from past investments have an opportunity cost of only 11.8%, because all the company can do with these cash flows is to replace money that has a cost of 11.8% ? Does this imply that the WACC is the correct reinvestment rate assumption for a project's cash flows

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