x fx Capital Budgeting Capital Budgeting Wenling Consulting Services is considering an eight year investment in two projects, A and B. Both projects will have Initial outlay, $120,000, and the terminal cash flow, $11,000. The annual after-tax operating cash flows are as follo 1 $ 3 4 5 6 7 $ $ $ $ $ Project A 31,000.00 28,700.00 23,440.00 23,200.00 21,000.00 19,900.00 18,900.00 16,500.00 $ $ $ $ $ $ $ 5 Project B 19,000.00 19,500.00 22,700.00 24,300.00 27,000.00 27,600.00 28,000.00 29,000.00 8 $ 15 Assume that Wenling's WACC is 10% 16 1. Calculate the NPV, PI, IRR, and MIRR. If the projects are mutually exclusive, which project should be selected? 13 2. Create an NPV profile chart for projects A and B. What is the exact crossover rate for these two projects? 203. Create a scenario analysis showing the NPV, IRR, and Pl for this investment, assuming the following three scenarios 211) Best Case: initial outlay would be only $100,000 and terminal cash flow would be $25,000 222) Base Case: Initial outlay and terminal cash would be exactly as expected 233) Worst Case: initial outlay would be $170,000 but terminal cash flow would be only $8,000