QUESTION 7 Your division is considering two projects with the following cash flows. Project A costs $120 million and has cash flows of $85 million in year 1, $65 million in year 2, and $45 million in year 3. Project B costs $200 million and has cash flows of $120 million in year 1, $100 million in year 2, and $80 million in year 3. By how much would Project B's net present value change if the WACC increased from 5% to 10%? NPV would decrease by $16.91 million NPV would decrease by $17.21 million NPV would decrease by $19.02 million NPV would decrease by $22.25 million NPV would decrease by $32.18 million

QUESTION 8 Your division is considering two projects with the following cash flows. Project A costs $120 million and has cash flows of $85 million in year 1, $65 million in year 2, and $45 million in year 3. Project B costs $200 million and has cash flows of $120 million in year 1, $100 million in year 2, and $80 million in year 3. What is project A's IRR if the WACC is 10%? 18.80% 20.59% 21.70% 25.72% 32.85%

QUESTION 9 Your division is considering two projects with the following cash flows. Project A costs $225 million and has cash flows of $130 million in year 1, $100 million in year 2, and $75 million in year 3. Project B costs $160 million and has cash flows of $95 million in year 1, $75 million in year 2, and $60 million in year 3. By how much would Project B's internal rate of return (IRR) change if the WACC increased from 5% to 15%? IRR would decrease by 0.34 percentage points IRR would decrease by 1.62 percentage points IRR would decrease by 1.99 percentage points IRR would decrease by 3.42 percentage points IRR would not change

QUESTION 10 Project X has a net present value (NPV) of $45.72 thousand and an internal rate of return (IRR) of 21.95% while Project Y has a net present value (NPV) of $36.19 thousand and an internal rate of return (IRR) of 28.35%. If these projects are independent and the company's WACC is 10%, what should the company do? Take neither of the projects Take only Project X because it has the higher NPV Take only Project Y because it has the higher IRR Take both of the projects because their NPVs are positive and their IRRs exceed the WACC