Capital budgeting criteria Video Excel Online Structured Activity: Capital budgeting criteria A company has a 11% WACC and is considering two mutually exclusive investments that cannot be repeated) with the following cash flows: 0 1 2 3 4 5 6 - $300 Project A - $387 - $193 - $100 $600 $600 $850 -$180 Project B -$405 $135 $135 $135 $135 $135 $135 $0 The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Open spreadsheet a. What is each project's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations. Project A: $ Project B: $ Capital budgeting criteria b. What is each project's IRR? Round your answer to two decimal places. Project A: % Project B: % c. 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: % Project B: % d. From your answers to parts a-c, which project would be selected? If the WACC was 18%, which project would be selected? e. 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 Search this ty: Capital budgeting criteria e. 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 0% NPY Project NPV Project B $ 5 $ $ 10 $ $ 12 $ $ 15 $ $ 18.1 $ $ 24.29 $ $ f. Calculate the crossover rate where the two projects' NPVs are equal. Round your answer to two decimal places. Do not round your intermediate calculations. % 9. 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: % Project B: Hea C WACC MOON Project A Project 5300 5 4 5600 -3405 -5190 $135 $135 5135 5135 50 1 PVC 4 NPV, ANA 6 Paulo IRR 21 PMR BU 24 Alma MR can be Poflow 29 PVV 2 Ouw 30 PV of You 31 PV of You 33 PV of template . Saved Insert Formulas Darts View Tell me what you want to do 12 c 05 Sum of Oulu PV N 0 PM 41FV WRMAR 5000 . MRR 3035 PV Sum of Outlow Pys Sum of Fom 61 PV PUIT 63 FV 4 WR.MRR 5000 0 09 D 18 00 56718 NA 70 WACC 71 NPVA 72 NPV 7) Accept 74 75 NPV Profile 76 Discount Rates 77 70 79 80 NPVA NPV 567410 Discount Rates NPVA NPV 0% $265 55718 5009 09 500% 10.00% 12.00% 1500% 18.10% 24293 VA NA NA NA BUA BE 34 35 86 87 80 1000% 12.00% 1500% 18 10% 24299 MUA MUA NPV Profiles $120 $1.00 50.00 500 9 91 92 93 94 95 96 97 99 99 100 101 102 103 $0.40 50.20 50.00 ON 5.00 10.00 13. IS ON MUN H -$300 1 -5387 $100 4 5600 34 Calculation of Crossover Rate 05 06 Project A 07 OS Project B 09 10 Project Delta 11 12 13 Crossover Rate RR 3600 $405 5135 -$100 5135 $135 5135 $135 $135 INA NA EVA WA ANA WA 18.00% 115 Project MR Calcio a WACC = 18 116 WACC 117 118 MRR 19 MIRR 120 121 122 123 124 VA
