Question
Your division is considering two projects with the following cash flows(in millions): Your division is considering two projects with the following cash flows (in millions)
Your division is considering two projects with the following cash flows(in millions):
Your division is considering two projects with the following cash flows (in millions)
0 1 2 3
project A -$25 $5 $10 $17
Project B -$20 $10 $9 $6
A.What are the projects' NPV's assuming the WACC is 5%, 10%, 15%?
B. What are the projects' IRRs at each of these WACCs?
C. If the WACC was 5% and A and B were mutually exclusive, which project would you choose? What if the WACC was 10%?15%? (Hint: The crossover rate is 7.81%)
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Bond Markets Analysis And Strategies
Authors: Frank J.Fabozzi
7th Edition
0136078974, 978-0136078975
