Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Yes! A company has a 12% WACC and is considering two mutually exclusive Investments (that cannot be repeated) with the following cash flows: 0 1

image text in transcribed

image text in transcribed

image text in transcribed

image text in transcribed

image text in transcribed

Yes!

A company has a 12% WACC and is considering two mutually exclusive Investments (that cannot be repeated) with the following cash flows: 0 1 2 3 5 6 7 $135 Project A -$300 -$387 -$193 -$100 $600 $600 $850 -$180 Project B -$400 $135 $135 $135 $135 $135 $0 The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Open spreadsheet a. What is each project's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations Project A: $ Project B: $ b. What is each project's IRR? Round your answer to two decimal places. Project A: % Project B: % c. What is each project's MIRR? (Hint: Consider Period 7 as the end of Project B's life.) Round your answer to two decimal places. Do not round your Intermediate calculations. Project A: % Project B: % d. From your answers to parts a-c, which project would be selected? If the WACC was 18%, which project would be selected? e. Construct NPV profiles for Projects A and B. Round your answers to the nearest cent. Do not round your intermediate calculations. Negative value should be indicated by a minus sign. Discount Rate NPV Project B NPV Project A $ 0% $ 5 $ $ 10 $ $ 12 $ $ 15 $ $ 18.1 $ $ $ 24.83 $ 1. Calculate the crossover rate where the two projects' NPVs are equal. Round your answer to two decimal places. Do not round your intermediate calculations. % g. What is each project's MIRR at a WACC of 18%? Round your answer to two decimal places. Do not round your intermediate calculations. Project A: Project B: % Capitalgerie WACC 12.00 WO 315 3135 135 5135 Formule 10 1 Project P Calculations 22 ON 15 16 Prem Cabelos 1 RR 21 Project MRRC 34 Amy Man be cadas 25 3000 SO Formula NA 2 P10 23 PV of Year un PV of Years Olow 11 Pof TO Farms PV of Year now Yew PV of Year in Year PV of Year 4 Wowow NA Sum of how 35 Sum of Outlow P PY 50.00 1 008 D 40 PM 41 99.00 Menu PL her SADO $135 58 Persoal of Years How Year F 4 How PV of FV of Year Www PVwwww ANA ANA 55 WO ON FY Anne WACO VINCE NPVA NE Acort Neveries WAN NOVA AN INA 73 Acomp 74 75 NPV Profile: 76 Discount NAVA Discount Rate NPVA NAV $72.18 NPVE $2.66 $266 $72.18 ON ANIA ANIA 78 79 80 BI 82 83 34 RS 86 10.00% 12.00 15.00 1810 24 83% 0% 5001 10.00% 12.00% 15.00% 18.10% 24.BON NA IN NA NA ANA NPV Profiles $10 89 91 Chart 16.00 MEN 1 9800 8187 100 10 00 wo 150 $180 101 100 103 104 Calculation of Crossover Rate 105 107 108 Project 109 110 Project Det 111 112 11) Crossover Rate $400 5135 $135 $135 $135 $136 $0 NA NA MNA MA NA 115 Project MIAR Calculations at WACC 18% 116 WACC 18.00% NA 110 MRRA 119 MRR

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamentals Of Futures And Options Markets

Authors: John C. Hull

4th Edition

0130176028, 9780130176028

More Books

Students also viewed these Finance questions