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Problem 1 1 . 1 5 ( NPV Profiles: Timing Differences ) eBook flow at t = 1 of $ 1 3 . 9 2
Problem NPV Profiles: Timing Differences
eBook
flow at of $ million. Under Plan cash flows would be $ million per year for years. The firm's WACC is
indicated by a minus sign. Do not round intermediate calculations. Round your answers to two decimal places.
Discount Rate
NPV Plan A
million
NPV Plan B
$
million
million
million
million
million
million
million
Identify each project's IRR. Do not round intermediate calculations. Round your answers to two decimal places.
Project A:
Project B:
Determine the crossover rate. Approximate your answer to the nearest whole number.
b Is it logical to assume that the firm would take on all available independent, averagerisk projects with returns greater than
these cash flows is to replace money that has a cost of
Does this imply that the WACC is the correct reinvestment rate assumption for a project's cash flows?
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