NPV Your division is considering two projects with the following cash flows (in millions): 1 2 3 + + Project A Project B - $25 -$20 $5 $10 $10 $9 $17 $6 What are the projects' NPVS assuming the WACC is 5%? 10%? 15%? b. What are the projects' IRRS at each of these WACCS? If the WACC was 5% and A and B were mutually exclusive, which project would you choose? What if the W ACC was 10%? 15%? (Hint: The crossover rate is 7.81%.) a. С.

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Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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NPV

NPV Your division is considering two projects with the following cash flows (in millions):
1
2
3
+
+
Project A
Project B
- $25
-$20
$5
$10
$10
$9
$17
$6
What are the projects' NPVS assuming the WACC is 5%? 10%? 15%?
b. What are the projects' IRRS at each of these WACCS?
If the WACC was 5% and A and B were mutually exclusive, which project would you
choose? What if the W ACC was 10%? 15%? (Hint: The crossover rate is 7.81%.)
a.
С.
Transcribed Image Text:NPV Your division is considering two projects with the following cash flows (in millions): 1 2 3 + + Project A Project B - $25 -$20 $5 $10 $10 $9 $17 $6 What are the projects' NPVS assuming the WACC is 5%? 10%? 15%? b. What are the projects' IRRS at each of these WACCS? If the WACC was 5% and A and B were mutually exclusive, which project would you choose? What if the W ACC was 10%? 15%? (Hint: The crossover rate is 7.81%.) a. С.
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