A company has a 12% 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 -$405 $132 $132 $132 $132 $132 $132 $0 The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below.     Open spreadsheet   What is each project's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations. Project A: $  fill in the blank 2 Project B: $  fill in the blank 3 What is each project's IRR? Round your answer to two decimal places. Project A: fill in the blank 4% Project B: fill in the blank 5% 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. Do not round your intermediate calculations. Project A: fill in the blank 6% Project B: fill in the blank 7%

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:

  0 1 2 3 4 5 6 7
                 
                 
Project A -$300 -$387 -$193 -$100 $600 $600 $850 -$180
Project B -$405 $132 $132 $132 $132 $132 $132 $0

The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below.

 

 
Open spreadsheet

 

    1. What is each project's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations.

      Project A: $  fill in the blank 2

      Project B: $  fill in the blank 3

    2. What is each project's IRR? Round your answer to two decimal places.

      Project A: fill in the blank 4%

      Project B: fill in the blank 5%

    3. 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. Do not round your intermediate calculations.

      Project A: fill in the blank 6%

      Project B: fill in the blank 7%

    4. From your answers to parts a-c, which project would be selected?

       

       

       

      If the WACC was 18%, which project would be selected?

       

       

       

 

  1. Construct NPV profiles for Projects A and B. Round your answers to the nearest cent. Do not round your intermediate calculations. Negative value should be indicated by a minus sign.

     

    Discount Rate NPV Project A NPV Project B
    0% $  fill in the blank 10 $  fill in the blank 11
    5 $  fill in the blank 12 $  fill in the blank 13
    10 $  fill in the blank 14 $  fill in the blank 15
    12 $  fill in the blank 16 $  fill in the blank 17
    15 $  fill in the blank 18 $  fill in the blank 19
    18.1 $  fill in the blank 20 $  fill in the blank 21
    23.33 $  fill in the blank 22 $  fill in the blank 23

     

  2. Calculate the crossover rate where the two projects' NPVs are equal. Round your answer to two decimal places. Do not round your intermediate calculations.

    fill in the blank 24%

  3. What is each project's MIRR at a WACC of 18%? Round your answer to two decimal places. Do not round your intermediate calculations.

    Project A: fill in the blank 25%

    Project B: fill in the blank 26%

 

 

 
 
 
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5680RNS
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Transcribed Image Text:5680RNS F65 69 67 WACC 71 66 Project Acceptance: 70 WACC 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 72 NPVB 91 92 93 94 G Wizard Co. currently has only a... File 73 Accept 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 5 119 120 121 122 123 124 125 126 127 128 129 Accept 130 131 132 NPVA $1.20 NPV Profiles: Discount Rates $1.00 $0.80 $0.60 $0.40 $0.20 $0.00 0% <> template Saved ✓ Home Project A Project B Project Delta MIRRA MIRRB A Calculation of Crossover Rate: Crossover Rate = IRRA 114 115 Project MIRR Calculations at WACC = 18% 116 WACC 117 118 5.00% Insert Draw Workbook Statistics Arial 0% 5.00% 10.00% 12.00% 15.00% 18.10% 23.33% fx B NPVA 10.00% Sheet1 + 12.00% 18.00% $2.66 $56.68 $2.66 18.00% Page Layout #N/A C #N/A NPVB 0 -$300 -$405 #N/A V 10 #N/A NPV Profiles #N/A #N/A $56.68 12.00% MindTap - Cengage Learning 1 -$387 $132 D #N/A 2 -$193 $132 #N/A E Formulas B Discount Rates 15.00% 3 -$100 $132 #N/A 0% 5.00% 10.00% 12.00% 15.00% 18.10% 23.33% 18.10% 4 $600 $132 #N/A Data G NPVA #N/A #N/A #N/A #N/A #N/A #N/A #N/A V Review $2.66 23.33% Search for tools, help, and more (Option + Q) 5 $600 $132 C Excel Online Student Work #N/A H NPVB #N/A #N/A #N/A #N/A #N/A #N/A #N/A View $56.68 ab I 6 $850 Help $132 #N/A -$180 $0 ng.cengage.com J #N/A General b My Questions | bartleby K V M ←0 .00 N .00 →.0 O P Q R S Start Page T ST NTT U V W Σ ✓ P X G how to screenshot on macbook... Y Editing ✓ Z AA Give Feedback to Microsoft AB + Comments AC T AD AE 50% +
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Excel Online Activity: Capital budgeting criteria
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Project A
Project B
X
Excel Online Structured Activity: Capital budgeting criteria
A company has a 12% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows:
Back
0
Project A:
1
Project B: $
Project A:
Project B:
ng.cengage.com
2
b My Questions | bartleby
-$300 -$387 -$193 -$100 $600 $600 $850
-$405 $132 $132 $132 $132 $132 $132
%
3
%
4
The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions
below.
b. What is each project's IRR? Round your answer to two decimal places.
5
Open spreadsheet
a. What is each project's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations.
6
7
-$180
$0
Start Page
G how to screenshot on macbook - Google...
Q Search this course
c. 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. Do not round your
intermediate calculations.
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Transcribed Image Text:< > G Wizard Co. currently has only a real estat... Freasia My Home Courses V Catalog and Study Tools Rental Options College Success Tips Career Success Tips RECOMMENDED FOR YOU Study Tools ? Help « Study Tools for Introductory Corporate Finance Give Feedback MindTap - Cengage Learning CENGAGE MINDTAP Excel Online Activity: Capital budgeting criteria Question 1 0.4/10 Submit Video Project A Project B X Excel Online Structured Activity: Capital budgeting criteria A company has a 12% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows: Back 0 Project A: 1 Project B: $ Project A: Project B: ng.cengage.com 2 b My Questions | bartleby -$300 -$387 -$193 -$100 $600 $600 $850 -$405 $132 $132 $132 $132 $132 $132 % 3 % 4 The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. b. What is each project's IRR? Round your answer to two decimal places. 5 Open spreadsheet a. What is each project's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations. 6 7 -$180 $0 Start Page G how to screenshot on macbook - Google... Q Search this course c. 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. Do not round your intermediate calculations. Autosaved at 11:41 PM + Next A-Z Office N A+
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