NPV and IRR Analysis Cummings Products is considering two mutually exclusive Investments whose expected net cash flows are as follows: Year Expected Net Cash Flows Project A Project B -$430 -$680 -528 0 1 210 2 -219 210 3 -150 210 4 210 1,100 820 5 210 6 990 210 -325 210 B 7 a. Select the correct graph for NPV profiles for Projects A and B. VPMS VPMS) 1400 1400 1200 1200 1000+ 1000 800 800 Project B 600 600 400 400 nect A 200 200 VPV) 1400 12001 1000 800 Proest A Prot/ 600 400 200 ProB gust B 25 30 contar com a 20 20 25 -5 -200 30 contar com os cara 5 200 400 2001 4001 Corror 4001 -4001 400 D WPVC) 14001 1200 2000 800 000 400 2004 Poet A cardo cabelung so 200 -400 The correct graph is-Select- b. What is each project's TAR? 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 were 11%. Da not round intermediate calculations. Round your adiowers to the nearest centi Project A: 5 Project : $ Which project, either should be selected? should be selected Select- Project B: c. Calculate the two projects NPVS, if each project's cost of capital were 11%. Do not round Intermediate calculations, Round your answers to the nearest cent Project A: $ Project : $ Which project, If either, should be selected? -Select- should be selected. Calculate the two projects NPVS, If each project's cost of capital were 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% (Mint: Consider Period as the end of Project B's life.) Do not round intermediate calculations. Round your answers to two decimal places. Project A: 9 Project B: % What is each project's MIRR at a cost of capital of 16%? (Mint consider Perod 7 as the end of Project B's ife.) 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 9 What is its significance? I. The crossover rate has no significance in capital budgeting analysis II. If the cost of capital is greater than the crossover rate, both the NPV and IRR methods will lead to the same project selection TIL. If the cost of capital is less than the crossover rate, both the NPV and IRR methods lead to the same project selections. -Select
