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Capital Budgeting Tools Expected Net Cash Flows Time Project A Project B 0 -$365 -$565 1 -$330 $180 2 -$220 $180 3 -$110 $180 4
Capital Budgeting Tools Expected Net Cash Flows Time Project A Project B 0 -$365 -$565 1 -$330 $180 2 -$220 $180 3 -$110 $180 4 $660 $180 5 $660 $180 6 $958 $180 7 -$220 $180 a. Finding each project's NPV at two different costs of capital WACC 11% WACC 17% Project A Project B NPV at WACC NPV at WACC b. Constructing NPV profiles for Projects A and B Cost of capital Project B B15 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 22% 24% 26% 28% 30% Project A NPV $0.00 $0.00 Formulas #N/A #N/A $0.00 #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A Project A Project A #N/A #N/A NPV $0.00 #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A Project B Project B
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