Q No 2: A company has a 12 percent WACC and is considering two mutually exclusive investments with the following net cash flows: 1 2 3 4 5 6 7 Project A -$300 -$387 -$193 -$100 $600 $134 $600 $134 $850 $134 -$180 $0 Project B -$405 $134 $134 $134 a. What is each project's NPV? b. What is each projecť's IRR? c. What is each projecť's MIRR? d. From your answers to parts a, b, and c, which project would be selected? e. What is each project's MIRR at a WACC of 18 percent?

Essentials Of Investments
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ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Q No 2: A company has a 12 percent WACC and is considering two
mutually exclusive investments with the following net cash flows:
1
2
3
4
6
7
Project A -$300 -$387 -$193 -$100
$134
$600
$134
$600
$134
$850
$134
-$180
Project B -$405
$134
$134
$0
a. What is each project's NPV?
b. What is each projecť's IRR?
c. What is each project's MIRR?
d. From your answers to parts a, b, and c, which project would be selected?
e. What is each project's MIRR at a WACC of 18 percent?
Transcribed Image Text:Q No 2: A company has a 12 percent WACC and is considering two mutually exclusive investments with the following net cash flows: 1 2 3 4 6 7 Project A -$300 -$387 -$193 -$100 $134 $600 $134 $600 $134 $850 $134 -$180 Project B -$405 $134 $134 $0 a. What is each project's NPV? b. What is each projecť's IRR? c. What is each project's MIRR? d. From your answers to parts a, b, and c, which project would be selected? e. What is each project's MIRR at a WACC of 18 percent?
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