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The Pinkerton Publishing Company is considering two mutually exclusive expansion plans. Plan A calls for the expenditure of $ 4 4 million on a large
The Pinkerton Publishing Company is considering two mutually exclusive expansion plans. Plan A calls for the expenditure of $ million on a largescale, integrated plant that will provide an expected cash flow stream of $ million per year for years. Plan B calls for the expenditure of $ million to build a somewhat less efficient, more laborintensive plant that has an expected cash flow stream of $ million per year for years. The firm's cost of capital is
Calculate each project's NPV Do not round intermediate calculations. 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:
Project B:
Set up a Project Delta by showing the cash flows that will exist if the firm goes with the large plant rather than the smaller plant. Round your answers to the nearest dollar. Use a minus sign to enter cash outflows, if any.
Year Project Delta Cash Flows
$
$
What is the NPV for this Project Delta Do not round intermediate calculations. Round your answer to the nearest dollar. Use a minus sign to enter negative value, if any.
$
What is the IRR for this Project Delta Round your answer to two decimal places.
Select the correct graph for the NPV profiles for Plan A Plan B and Project Delta c Select the correct graph for the NPV profiles for Plan A Plan B and Project
A
B
D
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