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Your firm is trying to determine which project it should invest in. The projects are mutually exclusive. The cost of capital is 12%. Year 0
Your firm is trying to determine which project it should invest in. The projects are mutually exclusive. The cost of capital is 12%. Year 0 1 2 3 4 5 6 7 Expected Cash Flows Project A -34,000 -27,000 11,500 20,500 30,500 35,000 38,000 40,000 Expected Cash Flows Project B -31,500 14,500 15,000 16,500 18,000 19,000 19,500 20,000 a) Calculate each project's IRR and the crossover rate of the two projects. b) Calculate each project's MIRR at a reinvestment rate of 10%. c) Calculate each project's regular payback period. d) Calculate each project's discounted payback period with a cost of capital of 12%. e) Calculate each project's profitability index at a cost of capital of 12%.|| f) Calculate each project's NPV. g) 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%
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