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How do I type in the correct amount for NPV Plan B discount rate 17% An oil-drilling company must choose between two mutually exclusive extraction
How do I type in the correct amount for NPV Plan B discount rate 17%
An oil-drilling company must choose between two mutually exclusive extraction projects, and each requires an initial outlay at t = 0 of $12 million. Under Plan A, all the oil would be extracted in 1 year, producing a cash flow at t = 1 of $14.4 million. Under Plan B, cash flows would be $2.1323 million per year for 20 years. The firm's WACC is 11.9%. a. Construct NPV profiles for Plans A and B. Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. 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 two decimal places. Discount Rate NPV Plan A NPV Plan B 0% $ 2.40 million $ 30.64 million 5 1.71 million 14.57 million 10 1.09 million 6.15 million 12 > 0.85 million 3.92 million 15 0.52 million 1.34 million 17 0.30 million 0.08 million 20 million -1.61 millionStep by Step Solution
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