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Problem 10-13 NPV and IRR Analysis Cummings Products Company is considering two mutually exclusive investments whose expected net cash flows are as follows: a. Construct
Problem 10-13 NPV and IRR Analysis Cummings Products Company is considering two mutually exclusive investments whose expected net cash flows are as follows: a. Construct NPV profiles for Projects A and B. Select the correct graph. The correct graph is b. What is each project's IRR? Do not round intermediate calculations. Round your answers to two decimal places. b. What is each project's IRR? Do not round intermediate calculations. Round your answers to two decimal places. Project A % Project B % Project A Project B $ Which project, if either, should be selected? Calculate the two projects' NPVs, if the cost of capital was 17%. Do not round intermediate calculations. Round your answers to the nearest cent. Project A : Project B $ What would be the proper choice? Project A % Project B % Project A % Project B % e. What is the crossover rate? Do not round intermediate calculations. Round your answer to two decimal places. % What is its significance? I. If the cost of capital is greater than the crossover rate, both the NPV and IRR methods will lead to the same project selection. II. If the cost of capital is less than the crossover rate, both the NPV and IRR methods lead to the same project selections
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