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Please do E, F, and G only!! 11-17 CAPITAL BUDGETING CRITERIA A company has an 11% WACC and is considering two mutually exclusive investments (that
Please do E, F, and G only!!
11-17 CAPITAL BUDGETING CRITERIA A company has an 11% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows: 5 0 H -$300 -$405 1 2 3 + + + - $387 -$193 -$100 $134 $134 $134 4 + $600 $134 6 7 + H $850 -$180 $134 $0 Project A Project B $600 $134 c. a. What is each project's NPV? b. What is each project's IRR? What is each project's MIRR? (Hint: Consider Period 7 as the end of Project B's life.) d. From your answers to parts a, b, and c, which project would be selected? If the WACC was 18%, which project would be selected? e. Construct NPV profiles for Projects A and B. f. Calculate the crossover rate where the two projects' NPVs are equal. g. What is each project's MIRR at a WACC of 18%Step by Step Solution
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