Question
Capital budgeting criteria A company has a 12% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows:
Capital budgeting criteria
A company has a 12% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows:
0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 |
Project A | -$300 | -$387 | -$193 | -$100 | $600 | $600 | $850 | -$180 |
Project B | -$400 | $131 | $131 | $131 | $131 | $131 | $131 | $0 |
What is each project's NPV? Round your answer to the nearest cent. Project A $______ Project B $______
What is each project's IRR? Round your answer to two decimal places. Project A _______% Project B _______%
What is each project's MIRR? (Hint: Consider Period 7 as the end of Project B's life.) Round your answer to two decimal places. Project A ___% Project B ___%
Construct NPV profiles for Plans A and B. Round your answers to the nearest cent.
Calculate the crossover rate where the two projects' NPVs are equal. Round your answer to two decimal places. __________% What is each project's MIRR at a WACC of 18%? Round your answer to two decimal places. Project A % Project B % |
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