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Business, 06.12.2021 19:50 isaiahbjohnson1839

A company is considering two mutually exclusive expansion plans. Plan A requires a $41 million expenditure on a large-scale integrated plant that would provide expected cash flows of $6.55 million per year for 20 years. Plan B requires a $11 million expenditure to build a somewhat less efficient, more labor-intensive plant with an expected cash flow of $2.47 million per year for 20 years. The firm's WACC is 9%. a. Calculate each project's NPV.
b. By graphing the NPV profiles for Plan A and Plan B, determine the crossover rate.
c. Calculate the crossover rate where the two projects' NPVs are equal.
d. Is NPV better than IRR for making capital budgeting decisions that add to shareholder value?

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