Question
Chapman Corp is planning to invest in two mutually exclusive projects: expanding the parking structures and building a new swimming pool. The cash flows for
Chapman Corp is planning to invest in two mutually exclusive projects: expanding the parking structures and building a new swimming pool. The cash flows for the two projects are given below. 0 1 2 3 4 IRR Parking Structure -120 10 40 100 80 24.13% Swimming Pool -100 35 125 30.66% A) Define mutually exclusive projects. B) Find the NPV for these two projects at the following discount rates 0%, 10%, 15% and 24%. C) Carefully and neatly plot the NPV profile (i.e., plot NPV vs. discount rates in part B) AND explain which project should be chosen at each discount rate (0%, 10%, 15%, and 24%) and why? Note: I suggest you use MS Excel to produce the plot. Also, please be sure to label the x- and y-axes as well as identify the points at which the curves cross the x- and y-axes (i.e., write down the values/numbers at which the curves cross both axes)
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