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scale differences A company is considering two mutually exclusive expansion plans. Plan A requires a $39 million expenditure on a large-scale integrated plant that would
scale differences A company is considering two mutually exclusive expansion plans. Plan A requires a $39 million expenditure on a large-scale integrated plant that would provide expected cash flows of $6.23 million per year for 20 years. Plan B requires a $13 million expenditure to build a somewhat less efficient, more labor-intensive plant with an expected cash flow of $2.91 million per year for 20 years. The firm's WACC is 10%. Calculate each project's NPV. Round your answer to two decimal places. Plan A $14 million Plan B $11.77 million Calculate each project's IRR. Round your answer to two decimal places. Plan A 15.0% Plan B 21.96% Graph the NPV profiles for Plan A and Plan B and approximate the crossover rate to the nearest percent. 1. ____________% THIS ANSWER IS NOT 22.2% OR 11.31% Calculate the crossover rate where the two projects' NPVs are equal. 11.26%
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