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Business, 15.04.2020 16:11 BrainGeek4848

A company has a 13% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows:

0 1 2 3 4 5 6 7
Project A -$300 -$387 -$193 -$100 $600 $600 $850 -$180
Project B -$400 $133 $133 $133 $133 $133 $133 0
A. What is each project's NPV? Round your answer to the nearest cent.

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.

Project A: %

Project B: %

D. Construct NPV profiles for Plans A and B. Round your answers to the nearest cent.

Discount Rate NPV Plan A NPV Plan B
0% $ $
5 $ $
10 $ $
12 $ $
15 $ $
18.1 $ $
24.18 $ $
E. Calculate the crossover rate where the two projects' NPVs are equal. Round your answer to two decimal places.

%

F. What is each project's MIRR at a WACC of 18%? Round your answer to two decimal places.

Project A: %

Project B: %

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Answers: 3

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