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Black Hills Products plans on investing for two mutually exclusive investments whose expected net cash flows are as follows: Expected Net Cash Flows Year Project
- Black Hills Products plans on investing for two mutually exclusive investments whose expected net cash flows are as follows:
|
| Expected Net Cash Flows | |
| Year | Project A | Project B |
| 0 | -$400 | -$650 |
| 1 | -528 | 210 |
| 2 | -219 | 210 |
| 3 | -150 | 210 |
| 4 | 1,100 | 210 |
| 5 | 820 | 210 |
| 6 | 990 | 210 |
| 7 | -325 | 210 |
- Construct NPV profiles for Projects A and B.
- What is each projects IRR?
- If each projects cost of capital were 10%, which project, if either, should be selected? If the cost of capital were 17%, what would be the proper choice?
- What is each projects MIRR at the cost of capital of 10%? At 17%? (Consider Period 7 as the end of Project Bs life.)
- What is the crossover rate?
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Financial Management Principles And Applications
Authors: Arthur J. Keown, J. William Petty, John D. Martin, Jr. Scott, David F.
10th Edition
0131450654, 9780131450653
