COUNT X NPV and IRR Analyals Cummings Products Company is considering two mutually exclusive Investments whose expected net cash flows are as follows: EXPECTED NET CASH FLOWS Year Project A Projects -$430 -5680 -528 210 -219 A o 0 1 2 210 3 - 150 210 4 1,100 210 5 820 210 6 990 210 7 -325 210 a. Construct NPV profiles for Projects A and B. Select the correct graph. VPMS) 1400 B VPV) 1400 1200 1200 1000 1000 800 800 Project / Project A 600 600 400 400 Project B Select the correct graph. Search this OO X WPMS) 1400 1 200 1000 800 PMS) 1400 1200 1000 AZ 600 Po 800 PA 400 600 400 200 Project 200 get Cast of storage 5 20 25 30 2001 -4001 Cantor cabar -200 -4001 D VPV (5) 1400 VPVS) 1400 ban 1.200 1200 1000 1000+ 800 800 Project B Project A 600 600 400 400 Proect A Project B 200- 200 25 20 20 25 30 Cost of cab Barat Cost of cap i capitaka -5 -200 -4001 -5 -200 -400 Search this course x The correct graph is-Select b. What is each project's IRR? Do not round Intermediate calculations. Round your answers to two decimal places Project A: % Project : c. Calculate the two projects' NPVs, If each project's cost of capital was 11%. Do not round intermediate calculations, Round your answers to the nearest cent. A-Z Project A: $ Project B: $ Which project, If either, should be selected? -Select- should be selected. Calculate the two projects' NPVS, If each project's cost of capital was 16%. Do not round Intermediate calculations. Round your answers to the nearest cent. Project A: $ Project B: $ What would be the proper choice? -Select- Is the proper choice. d. What is each project's MIRR at a cost of capital of 11%? (Hint: Consider Period 7 as the end of Project B's life.) Do not round intermediate calculations. Round your answers to two decimal places. Project A: % Project B: What is each project's MIRR at a cost of capital of 16%? (Hint: Consider Period 7 as the end of Project B's life.) Do not round intermediate calculations. Round your answers to two decimal places. % Project A: % % Project B: -> course Project B: $ X What would be the proper choice? Select is the proper choice. d. What is each project's MIRR at a cost of capital of 11%? (Hint: Consider Period 7 as the end of Project B's life.) Do not round Intermediate calculations. Round your answers to two decimal places. Project A: % Project B: % What is each project's MIRR at a cost of capital of 16%? (Hint: Consider Period 7 as the end of Project. B's life.) Do not round Intermediate calculations. Round your answers to two decimal places. Project A: % Project B: % e. What is the crossover rate? Do not round Intermediate calculations. Round your answer to two decimal places. % What is its significance? I. If the cost of capital is greater than the crossover rate, both the NPV and IRR methods will lead to the same project selection. II. If the cost of capital is less than the crossover rate, both the NPV and IRR methods lead to the same project selections III. The crossover rate has no significance in capital budgeting analysis. -Select- Om Icon Key Question 2 of
