A B C D E 2 345 Consider the following two mutually exclusive projects. What is the IRR for each project? What is the crossover rate between the two projects? What is the NPV for each project at a required return of 11 percent? What is the NPV for each project at the various interest rates shown? 4 Input area: 69 7 Year 0 8 Year 1 9 Year 2 A B ($41,300) ($41,300) 19,100 6,300 17,800 14,200 15,200 17,900 8,400 30,300 10 Year 3 11 Year 4 12 13 Required return 11% 14 15 Required return 0% 16 Required return 5% 17 Required return 10% 18 Required return 15% 19 Required return 20% 25% FL G H 20 Required return 21 22 (Use cells A6 to C20 from the given information to complete this question. You must use the built-in Excel 23 function to answer this question.) 24 24 25 Output area: 26 27 IRR A 28 IRR B 29 30 31 Year 0 32 Year 1 33 Year 2 34 Year 3 35 Year 4 36 37 Crossover rate 38 39 NPV A 40 NPV B 41 13.11% -3.10% CF difference 42 NPV A NPV B 43 NPV at 0% 44 NPV at 5% 45 NPV at 10% 46 NPV at 15% 47 NPV at 20% 48 NPV at 25% 49

A B C D E 2 345 Consider the following two mutually exclusive projects. What is the IRR for each project? What is the crossover rate between the two projects? What is the NPV for each project at a required return of 11 percent? What is the NPV for each project at the various interest rates shown? 4 Input area: 69 7 Year 0 8 Year 1 9 Year 2 A B ($41,300) ($41,300) 19,100 6,300 17,800 14,200 15,200 17,900 8,400 30,300 10 Year 3 11 Year 4 12 13 Required return 11% 14 15 Required return 0% 16 Required return 5% 17 Required return 10% 18 Required return 15% 19 Required return 20% 25% FL G H 20 Required return 21 22 (Use cells A6 to C20 from the given information to complete this question. You must use the built-in Excel 23 function to answer this question.) 24 24 25 Output area: 26 27 IRR A 28 IRR B 29 30 31 Year 0 32 Year 1 33 Year 2 34 Year 3 35 Year 4 36 37 Crossover rate 38 39 NPV A 40 NPV B 41 13.11% -3.10% CF difference 42 NPV A NPV B 43 NPV at 0% 44 NPV at 5% 45 NPV at 10% 46 NPV at 15% 47 NPV at 20% 48 NPV at 25% 49

Fundamentals Of Financial Management, Concise Edition (mindtap Course List)

10th Edition

ISBN:9781337902571

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter11: The Basics Of Capital Budgeting

Section: Chapter Questions

Problem 11P: CAPITAL BUDGETING CRITERIA: MUTUALLY EXCLUSIVE PROJECTS Project S requires an initial outlay at t =...

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