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Your division is considering two projects with the following cash flows (in millions):                             &nbs

Your division is considering two projects with the following cash flows (in millions):

                             0                           1                                  2                                     3

                             |----------------------|--------------------------|-----------------------------|

Project A           - $25                        $5                               $10                                 $17

Project B          - $20                       $10                                $9                                  $6

  1. What are the projects’ NPVs assuming the WACC is 5%? 10%? 15.%?
  2. What are the projects' IRRs at each of these WACCS?
  3. If the WACC was 5% and A and B were mutually exclusive, which project would you choose? What if the WACC was 10%? 15%? (Hint: The crossover rate is 7.8%)

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