eBook Problem Walk$-$Through

A company has a $12\%$ WACC and is considering two mutually exclusive investments $($that cannot be repeated$)$ with the following cash flows:

$01234567$

Project A $-$$$300-$$$387-$$$193-$$$100$ $$600$ $$600$ $$850-$$$180$

Project B $-$$$400$ $$134$ $$134$ $$134$ $$134$ $$134$ $$134$ $$0$

What is each project's NPV$?$ Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest cent.

Project A: $

Project B: $

What is each project's IRR? Do not round intermediate calculations. Round your answers to two decimal places.

Project A:

$\%$

Project B:

$\%$

What is each project's MIRR? $($Hint: Consider Period $7$ as the end of Project B$\text{'}$s life.$)$ Do not round intermediate calculations. Round your answers to two decimal places.

Project A:

$\%$

Project B:

$\%$

From your answers to parts a$-$c$,$ which project would be selected?

$-$Select$-$

If the WACC was $18\%,$ which project would be selected?

$-$Select$-$

Construct NPV profiles for Projects A and B$.$ If an amount is zero, enter $0.$ Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest cent.

Discount Rate NPV Project A NPV Project B

$0\%$ $

$

$5$

$10$

$12$

$15$

$18\mathrm{.}1$

$24\mathrm{.}51$

Calculate the crossover rate where the two projects' NPVs are equal. Do not round intermediate calculations. Round your answer to two decimal places.

$\%$

What is each project's MIRR at a WACC of $18\%?$ Do not round intermediate calculations. Round your answers to two decimal places.

Project A:

$\%$

Project B:

$\%$eBook Problem Walk$-$Through

A company has a $12\%$ WACC and is considering two mutually exclusive investments $($that cannot be repeated$)$ with the following cash flows:

$01234567$

Project A $-$$$300-$$$387-$$$193-$$$100$ $$600$ $$600$ $$850-$$$180$

Project B $-$$$400$ $$134$ $$134$ $$134$ $$134$ $$134$ $$134$ $$0$

What is each project's NPV$?$ Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest cent.

Project A: $

Project B: $

What is each project's IRR? Do not round intermediate calculations. Round your answers to two decimal places.

Project A:

$\%$

Project B:

$\%$

What is each project's MIRR? $($Hint: Consider Period $7$ as the end of Project B$\text{'}$s life.$)$ Do not round intermediate calculations. Round your answers to two decimal places.

Project A:

$\%$

Project B:

$\%$

From your answers to parts a$-$c$,$ which project would be selected?

$-$Select$-$

If the WACC was $18\%,$ which project would be selected?

$-$Select$-$

Construct NPV profiles for Projects A and B$.$ If an amount is zero, enter $0.$ Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest cent.

Discount Rate NPV Project A NPV Project B

$0\%$ $

$

$5$

$10$

$12$

$15$

$18\mathrm{.}1$

$24\mathrm{.}51$

Calculate the crossover rate where the two projects' NPVs are equal. Do not round intermediate calculations. Round your answer to two decimal places.

$\%$

What is each project's MIRR at a WACC of $18\%?$ Do not round intermediate calculations. Round your answers to two decimal places.

Project A:

$\%$

Project B:

$\%$