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Q5. Your division is considering two projects with the following net cash flows (in millions): 0 3 Project A - $25 Project B -$20 1

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Q5. Your division is considering two projects with the following net cash flows (in millions): 0 3 Project A - $25 Project B -$20 1 + $5 $10 2. + $10 $9 $17 $6 a. What are the projects' NPVs, assuming the WACC is 5 percent? 10 percent? 15 percent? b. What are the projects' IRRs at each of these WACCs? c. If the WACC were 5 percent and A and B were mutually exclusive, which would you choose? What if the WACC were 10 percent? 15 percent? (Hint: The crossover rate is 7.81 percent.)

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