eBook NPV and TRR Analysis Currmings Products Company is considering two mutually exclusive investments whose expected net cash flows are as follows: Year 0 1 2 EXPECTED NET CASH FLOWS Project A Project -$350 $620 -528 210 -219 210 - 150 210 1.100 210 820 210 990 210 210 4 5 6 7 a. Construct NPV profiles for Projects A and B. Select the correct graph. A 3 VPMS) 1400 12001 V VPVS) 1400 1200+ 1000 1400 1000+ 1200 800 1000+ Piqet BOON PR 15 20 25 30 -200 Care -4001 The correct graph is de b. What is each project's IRRO De not round intermediate calculations. Round your answers to two decimal places Project : Project B: c. Calculate the two projects' NPV feach project's cost of capital was 10%. Do not round intermediate calculations. Round your answers to the nearest cont. Project AS Project : Which project, the should be selected? Calculate the the projects, each project's cost of capital was. Do not round intermediate culations. Round your answers to the east omt Projects Projects What would be the perche et the proper chance d. Wat is each project's cost of capital of 10%7Cint: Consider Pro 7 as the end of Project B's) Do not round intermediate calculations. Round your to two domal places Project What is a prop Icon of capital of 1047 (Hint: comider Period 7 as the end of Project refe.) Do not round interinedate conos, Round your wwers to decres places Project A: What is the rolete? Do not round remedies. Round your answer to two decimal places What is significance Select should be selected Calculate the two projects' NPVS, if each project's cost of capital was 18%. Do not round intermediate calculations, Round your answers 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 10%? (Hint: Consider Period 7 as the end of Project B's life.) Do not round intermediate Project A: 96 Project B: % What is each project's MIRR at a cost of capital of 18%? (Hint: Consider Period 7 as the end of Project B's life.) Do not round intermediate Project A: % Project B: 9% e. What is the crossover rate? Do not round intermediate calculations. Round your answer to two decimal places. % What is its significance? 1. If the cost of capital is less than the crossover rate, both the NPV and IRR methods lead to the same project selections. 11. The crossover rate has no significance in capital budgeting analysis. IIL. If the cost of capital is greater than the crossover rate, both the NPV and IRR methods will lead to the same project selection. -Select- eBook NPV and TRR Analysis Currmings Products Company is considering two mutually exclusive investments whose expected net cash flows are as follows: Year 0 1 2 EXPECTED NET CASH FLOWS Project A Project -$350 $620 -528 210 -219 210 - 150 210 1.100 210 820 210 990 210 210 4 5 6 7 a. Construct NPV profiles for Projects A and B. Select the correct graph. A 3 VPMS) 1400 12001 V VPVS) 1400 1200+ 1000 1400 1000+ 1200 800 1000+ Piqet BOON PR 15 20 25 30 -200 Care -4001 The correct graph is de b. What is each project's IRRO De not round intermediate calculations. Round your answers to two decimal places Project : Project B: c. Calculate the two projects' NPV feach project's cost of capital was 10%. Do not round intermediate calculations. Round your answers to the nearest cont. Project AS Project : Which project, the should be selected? Calculate the the projects, each project's cost of capital was. Do not round intermediate culations. Round your answers to the east omt Projects Projects What would be the perche et the proper chance d. Wat is each project's cost of capital of 10%7Cint: Consider Pro 7 as the end of Project B's) Do not round intermediate calculations. Round your to two domal places Project What is a prop Icon of capital of 1047 (Hint: comider Period 7 as the end of Project refe.) Do not round interinedate conos, Round your wwers to decres places Project A: What is the rolete? Do not round remedies. Round your answer to two decimal places What is significance Select should be selected Calculate the two projects' NPVS, if each project's cost of capital was 18%. Do not round intermediate calculations, Round your answers 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 10%? (Hint: Consider Period 7 as the end of Project B's life.) Do not round intermediate Project A: 96 Project B: % What is each project's MIRR at a cost of capital of 18%? (Hint: Consider Period 7 as the end of Project B's life.) Do not round intermediate Project A: % Project B: 9% e. What is the crossover rate? Do not round intermediate calculations. Round your answer to two decimal places. % What is its significance? 1. If the cost of capital is less than the crossover rate, both the NPV and IRR methods lead to the same project selections. 11. The crossover rate has no significance in capital budgeting analysis. IIL. If the cost of capital is greater than the crossover rate, both the NPV and IRR methods will lead to the same project selection. -Select
