Home / Questions / 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:
| 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 |
| 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 %
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