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Scale Differences The Pinkerton Publishing Company is considering two mutually exclusive expansion plans. Plan A calls for the expenditure of $44 million on a large-scale,
Scale Differences The Pinkerton Publishing Company is considering two mutually exclusive expansion plans. Plan A calls for the expenditure of $44 million on a large-scale, integrated plant that will provide an expected cash now stream of $6 million per year for 20 years. Plan B calls for the expenditure of $14 million to build a somewhat less efficient, more labor-intensive plant that has an expected cash flow stream of $2.7 million per year for 20 years. The firm's cost of capital is 9%. a. Calculate each project's NPV. Round your answers to the nearest dollar. Project A $ Project B $ Calculate each project's IRR. Round your answers to two decimal places. Project A 3 % Project B 25 % b. set up a Project A by showing the cash flows that will exist If the firm goes with the large plant rather than the smaller plant. What is the NPV for this Project Delta? Round your answer to the nearest dollar. What is the IRR for this Project Delta
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