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A company has a 12% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows: 4 5 6 Project A Project B 0 -$300 -$400 -Select- 2 + -$387 -$193 -$100 $600 $134 $134 $134 $134 $134 8 1 a. What is each project's NPV? Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest cent. Project A: $ Project B: $ b. What is each project's IRR? Do not round intermediate calculations. Round your answers 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.) Do not round intermediate calculations. Round your answers to two decimal places. Project A: Project B: d. From your answers to parts a-c, which project would be selected? Discount Rate 0% % 3 % $ $600 $850 $134 If the WACC was 18%, which project would be selected? 7 -Select- 8 e. Construct NPV profiles for Projects A and B. If an amount is zero, enter 0. Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest cent. NPV Project A -$180 $0 NPV Project B

A company has a 12% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows: 4 5 6 Project A Project B 0 -$300 -$400 -Select- 2 + -$387 -$193 -$100 $600 $134 $134 $134 $134 $134 8 1 a. What is each project's NPV? Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest cent. Project A: $ Project B: $ b. What is each project's IRR? Do not round intermediate calculations. Round your answers 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.) Do not round intermediate calculations. Round your answers to two decimal places. Project A: Project B: d. From your answers to parts a-c, which project would be selected? Discount Rate 0% % 3 % $ $600 $850 $134 If the WACC was 18%, which project would be selected? 7 -Select- 8 e. Construct NPV profiles for Projects A and B. If an amount is zero, enter 0. Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest cent. NPV Project A -$180 $0 NPV Project B

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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A company has a 12% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows: 2 3 4 5 + + + + -$193 -$100 $600 $600 $134 $134 $134 $134 $134 Project A Project B 0 ㅏ -$300 -$387 -$400 $134 1 -Select- a. What is each project's NPV? Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest cent. Project A: $ Project B: $ b. What is each project's IRR? Do not round intermediate calculations. Round your answers 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.) Do not round intermediate calculations. Round your answers to two decimal places. Project A: Project B: d. From your answers to parts a-c, which project would be selected? -Select- Discount Rate 0% 5 % % If the WACC was 18%, which project would be selected? $ % % 6 + $850 -$180 $0 7 e. Construct NPV profiles for Projects A and B. If an amount is zero, enter 0. Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest cent. NPV Project A $ NPV Project B Wake Up A- go N
Transcribed Image Text:A company has a 12% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows: 2 3 4 5 + + + + -$193 -$100 $600 $600 $134 $134 $134 $134 $134 Project A Project B 0 ㅏ -$300 -$387 -$400 $134 1 -Select- a. What is each project's NPV? Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest cent. Project A: $ Project B: $ b. What is each project's IRR? Do not round intermediate calculations. Round your answers 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.) Do not round intermediate calculations. Round your answers to two decimal places. Project A: Project B: d. From your answers to parts a-c, which project would be selected? -Select- Discount Rate 0% 5 % % If the WACC was 18%, which project would be selected? $ % % 6 + $850 -$180 $0 7 e. Construct NPV profiles for Projects A and B. If an amount is zero, enter 0. Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest cent. NPV Project A $ NPV Project B Wake Up A- go N
10 12 15 18.1 24.51 f. Calculate the crossover rate where the two projects' NPVs are equal. Do not round intermediate calculations. Round your answer to two decimal places. % g. What is each project's MIRR at a WACC of 18%? Do not round intermediate calculations. Round your answers to two decimal places. Project A: Project B: % %
Transcribed Image Text:10 12 15 18.1 24.51 f. Calculate the crossover rate where the two projects' NPVs are equal. Do not round intermediate calculations. Round your answer to two decimal places. % g. What is each project's MIRR at a WACC of 18%? Do not round intermediate calculations. Round your answers to two decimal places. Project A: Project B: % %
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