Capital budgeting criteria A company has a 11% WACC and is considering two mutually exclu
Capital budgeting criteria
A company has a 11% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows:
Project A |
-$300 |
-$387 |
-$193 |
-$100 |
$600 |
$600 |
$850 |
-$180 |
Project B |
-$400 |
$131 |
$131 |
$131 |
$131 |
$131 |
$131 |
$0 |
What is each project's NPV? Round your answer to the nearest cent.
Project A $
Project B $
What is each project's IRR? Round your answer to two decimal places.
Project A %
Project B %
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 %
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 |
$ |
$ |
23.54 |
$ |
$ |
Calculate the crossover rate where the two projects' NPVs are equal. Round your answer to two decimal places.
%
What is each project's MIRR at a WACC of 18%? Round your answer to two decimal places.
Project A %
Project B %
Abhinav
03-Dec-2019