Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Your division is considering two projects with the following cash flows (in millions): 0 1 2 3 Project A-$19 $8 $15 $17 Project B-$17 $11

Your division is considering two projects with the following cash flows (in millions):

0 1 2 3

Project A-$19 $8 $15 $17

Project B-$17 $11 $8 $6

  • What are the projects' NPVs assuming the WACC is 5%? Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to two decimal places.

Project A:$million

Project B:$million

  • What are the projects' NPVs assuming the WACC is 10%? Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to two decimal places.

Project A:$million

Project B:$million

  • What are the projects' NPVs assuming the WACC is 15%? Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to two decimal places.

Project A:$million

Project B:$million

  • What are the projects' IRRs assuming the WACC is 5%? Do not round intermediate calculations. Round your answer to two decimal places.

Project A:%

Project B:%

  • What are the projects' IRRs assuming the WACC is 10%? Do not round intermediate calculations. Round your answer to two decimal places.

Project A:%

Project B:%

  • What are the projects' IRRs assuming the WACC is 15%? Do not round intermediate calculations. Round your answer to two decimal places.

Project A:%

Project B:%

  • If the WACC was 5% and A and B were mutually exclusive, which project would you choose? (Hint: The crossover rate is 89.04%.)

-Select-

Project A

Project B

Neither A nor B

  • If the WACC was 10% and A and B were mutually exclusive, which project would you choose? (Hint: The crossover rate is 89.04%.)

-Select-

Project A

Project B

Neither A nor B

  • If the WACC was 15% and A and B were mutually exclusive, which project would you choose? (Hint: The crossover rate is 89.04%.)

-Select-

Project A

Project B

Neither A nor B

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

Entrepreneurial Finance

Authors: Chris LeachJ LeachRonald Melicher

3rd Edition

0324561253, 9780324561258

More Books

Students also viewed these Finance questions

Question

What is the coefficient of determination and how is it computed?

Answered: 1 week ago

Question

3. It is the commitment you show that is the deciding factor.

Answered: 1 week ago