Question
Capital budgeting criteria Please help solve for all the spaces with ???'s A company has a 13% WACC and is considering two mutually exclusive investments
Capital budgeting criteria
Please help solve for all the spaces with "???"'s
A company has a 13% 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 | -$405 | $135 | $135 | $135 | $135 | $135 | $135 | $0 |
What is each project's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations. Project A $ 162.48 Project B $ 134.67
What is each project's IRR? Round your answer to two decimal places. Project A %18.1 Project B %24.29
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. Do not round your intermediate calculations. Project A %15.61 Project B %???
Construct NPV profiles for Projects A and B. Round your answers to the nearest cent. Do not round your intermediate calculations. Negative value should be indicated by a minus sign.
Discount Rate | NPV Project A | NPV Project B |
0% | $890 | $405 |
5 | $540.09 | $280.19 |
10 | $283.34 | $182.93 |
12 | $200.41 | $150 |
15 | $92.96 | $105.87 |
18.1 | $-0.09 | $65.92 |
24.29 | $-143.45 | $ ??? |
Calculate the crossover rate where the two projects' NPVs are equal. Round your answer to two decimal places. Do not round your intermediate calculations. %???
What is each project's MIRR at a WACC of 18%? Round your answer to two decimal places. Do not round your intermediate calculations. Project A %18.1 Project B %???
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started