Question
You have been asked to analyze two mutually exclusive projects. Expected Cash Flow Expected Cash Flows Year Project A Project B 0 -171,000 -44,500 1
You have been asked to analyze two mutually exclusive projects.
Expected Cash Flow | Expected Cash Flows | |
Year | Project A | Project B |
0 | -171,000 | -44,500 |
1 | -81,000 | 12,500 |
2 | -14,500 | 14,000 |
3 | 31,500 | 16,550 |
4 | 90,500 | 20,000 |
5 | 122,500 | 21,500 |
6 | 167,000 | 23,500 |
7 | 202,000 | 26,000 |
8 | 265,000 | 33,000 |
9 | 325,000 | 42,000 |
a) Construct the NPV profiles for Project A and Project B. (Note: plot the NPVs of both projects on the same graph.) The cost of capital ranges from 0% to 30% by increments of 2%.
b) Calculate each projects IRR
c) Calculate the crossover rate of the two projects.
d) Calculate each projects MIRR at a cost of capital of 14% and reinvestment rate of 10%.
e) Calculate each projects regular payback period.
f) Calculate each projects discounted payback period with a cost of capital of 14%.
g) Calculate each projects profitability index at a cost of capital of 14%.
h) Calculate each projects NPV at a required rate of return of 14%.
i) Calculate each projects NPV at a required rate of return of 28%.
Please solve using excel and show formulas.
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