Question

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

0 1 2 3 Project A -$19 $8 $15 $17

Project B -$17 $11 $8 $6

What are the projects' NPVs assuming the WACC is 5%? Round your answer to two decimal places. Do not round your intermediate calculations. Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative value should be indicated by a minus sign.

Project A $ million

Project B $ million

What are the projects' NPVs assuming the WACC is 10%? Round your answer to two decimal places. Do not round your intermediate calculations. Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative value should be indicated by a minus sign.

Project A $ million

Project B $ million

What are the projects' NPVs assuming the WACC is 15%? Round your answer to two decimal places. Do not round your intermediate calculations. Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative value should be indicated by a minus sign.

Project A $ million

Project B $ million

What are the projects' IRRs assuming the WACC is 5%? Round your answer to two decimal places. Do not round your intermediate calculations.

Project A %

Project B %

What are the projects' IRRs assuming the WACC is 10%? Round your answer to two decimal places. Do not round your intermediate calculations.

Project A %

Project B %

What are the projects' IRRs assuming the WACC is 15%? Round your answer to two decimal places. Do not round your intermediate calculations.

Project A %

Project B %

If the WACC was 5% and A and B were mutually exclusive, which project would you choose? (Hint: The crossover rate is 89.04%.)

If the WACC was 10% and A and B were mutually exclusive, which project would you choose? (Hint: The crossover rate is 89.04%.)

If the WACC was 15% and A and B were mutually exclusive, which project would you choose? (Hint: The crossover rate is 89.04%.)

Answer 1

1.
=NPV(5%,{-19;8;15;17})*(1+5%)=16.9097289709535

2.
=NPV(5%,{-17;11;8;6})*(1+5%)=5.91545189504373

3.
=NPV(10%,{-19;8;15;17})*(1+10%)=13.4417731029301

4.
=NPV(10%,{-17;11;8;6})*(1+10%)=4.11945905334335

5.
=NPV(15%,{-19;8;15;17})*(1+15%)=10.476452699926

6.
=NPV(15%,{-17;11;8;6})*(1+15%)=2.55946412427057

7.
=IRR({-19;8;15;17})=42.037%

8.
=IRR({-17;11;8;6})=24.965%

9.
=IRR({-19;8;15;17})=42.037%

10.
=IRR({-17;11;8;6})=24.965%

11.
=IRR({-19;8;15;17})=42.037%

12.
=IRR({-17;11;8;6})=24.965%

13.
A

14.
A

15.
A