Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please show all work and stepa and use excel if necessary A-Z Excel Online Structured Activity: Capital budgeting criteria A company has a 12% WACC

please show all work and stepa and use excel if necessary
image text in transcribed
image text in transcribed
image text in transcribed
A-Z Excel Online Structured Activity: Capital budgeting criteria A company has a 12% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows: 0 1 2 3 4 5 6 7 $131 Project A -$300 -$387 -$193 -$100 $600 $600 $850 -$180 Project B -$405 $131 $131 $131 $131 $131 $0 The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. N Open spreadsheet a. What is each project's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations. Project A: $ 200.41 g Project B: $ 133.59 cy- Capital budgeting criteria 0 X a. What is each project's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations. Project A: $ 200.41 Project B: $ 133.59 b. What is each project's IRR? Round your answer to two decimal places. Project A: 18.10 % Project B: 23.01 % c. What is each project's MIRR? (Hint: Consider Period 7 as the end of Project B's life.) Round your answer to two decimal places. Do not round your intermediate calculations. Project A: 15.10 5 % Project B: 16.66 % d. From your answers to parts a-c, which project would be selected? Project A If the WACC was 18%, which project would be selected? Project Bv e: Construct NPV profiles for Projects A and B. Round your answers to the nearest cent. Do not round your Intermediate calculations. Negative value should be indicated by a minus sign. Discount Rate NPV Project A NPV Project B 0% $ A- $ 1 5 $ $ 10 $ $ 12 $ 15 $ $ 18.1 $ $ 23.01 $ f. Calculate the crossover rate where the two projects' NPVs are equal. Round your answer to two decimal places. Do not round your intermediate calculations, 15.10 % g. What is each project's MIRR at a WACC of 18%? Round your answer to two decimal places. Do not round your intermediate calculations. Project A: % % Project B

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Illustrating Finance Policy With Mathematica

Authors: Nicholas L. Georgakopoulos

1st Edition

3319953710, 978-3319953717

More Books

Students also viewed these Finance questions

Question

Discuss consumer-driven health plans.

Answered: 1 week ago