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NPV profiles: timing differences An oil drilling company must choose between two mutually exclusive extraction projects, and each costs $11 million. Under Plan A, all
NPV profiles: timing differences An oil drilling company must choose between two mutually exclusive extraction projects, and each costs $11 million. Under Plan A, all the oil would be extracted in 1 year, producing a cash flow at t = 1 of $13.2 million. Under Plan B, cash flows would be $1.9546 million per year for 20 years. The firm's WACC is 12.8%. 1. Construct NPV profiles for Plans A and B. Round your answers to two decimal places. Discount RateNPV Plan ANPV Plan B 0%.$______million$______million 10%..$______million$______million 12%..$______million$______million 15%..$______million$______million 17%..$______million$______million 20%..$______million$______million 2. Identify each project's IRR. Round your answers to two decimal places. Project A ____% Project B ____% Find the crossover rate. Round your answer to two decimal places. ________%
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