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Consider the following projects, X and Y where the firm can only choose one. Project X costs $ 1 3 0 0 and has cash
Consider the following projects, X and Y where the firm can only choose one. Project X costs $ and has cash flows of $ $ $ $ $ in each of the next years. Project Y also costs $ and generates cash flows of $ $ $ $ for the next years, respectively. WACC
A Calculate the projects NPVs IRRs, payback periods.
B If the two projects are independent, which projects should be chosen?
CIf the two projects are mutually exclusive, which projects should be chosen?
D Plot NPV profiles for the two projects. Identify the projects IRRs on the graph.
E If the WACC were percent, would this change your recommendation if the projects were mutually exclusive? If the WACC were percent, would this change your recommendation? Explain your answers.
F There is a crossover rate of Xs and Ys NPV curves, and mark it on the graph with Point O Explain in words what this rate is and how it affects the choice between mutually exclusive projects.
G If it possible for conflicts to exist between the NPV and the IRR when independent projects are being evaluated? Explain your answer
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