This 16 8. The Basics of Capital Budgetingt NPV Profile A project's NPV profile graph intersects the Y-axis at 0% cost of capital and intersects the X-axis at the project's represents the project's undiscounted NPV. The point at which 2 projects' profiles cress one another is the crossover rate. The crossover rate can be found by calculating the of the differences in the prejects' cash flows (Project Delta). A project has most of its cash flows coming in later years, its NPV will severely penalized by high capital costa. The sipnincance of the crossover rate is that at any cost of capital increases; but a project whose cash flows come cartier will not be provide the same conclusion for evaluating mutually exclusive projects. However, at any cost of capital the coll than the crossover rate, the NPV and IRR methsds' canclusions will contlict. In that situation, the method will always provide the correct project acceptance result. Quantitative Problem: Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the arhalysis. Beth projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are ail included in these cash flows. Both projacts have 4-year ives, and they have risk characteristics similar to the firm's average project. Bellinger's waCC is 85. What is Project Deita's IRR? Do not round intermedlate calculations. Round your answer to two decimal places. What is the significance of this IRR? It is the after this point when mutually exclusive projects are considered there is no conflict in project acceptance between the NPV and IRR approaches. Review the graphs below. Select the graph that correctly represents the correct NPV pro6ile for Projects A and B by using the folowing drop down menu. NPV Proflles A : NPV Profiles 8 Review the graphs below. Select the graph that correctly represents the correct NPV profile for Projects A and B by using the following drop down menu