Question

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

Years	0	1	2	3
Project A	-21	14	9	3
Project B	-35	20	8	15

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 %

Answer 1

1)

We can use the financial calculator for this solution

i)

Project A

Press CF

CF0 = -21

C01 = 14

F01 = 1

C02 =9

F02=1

C03=3

F03=1

Press NPV

give I = 5

press ENTER and then press down arrow

NPV gets reflected, now Press CPT

We get NPV as 3.088

ii)

Project B

Press CF

CF0 = -35

C01 =20

F01 = 1

C02 =8

F02=1

C03=15

F03=1

Give I = 5

we get NPV as 4.26

b)

i)

Project A

Press CF

CF0 = -21

C01 = 14

F01 = 1

C02 =9

F02=1

C03=3

F03=1

Press NPV

give I = 10

we get NPV as 1.42

ii)

Project B

Press CF

CF0 = -35

C01 =20

F01 = 1

C02 =8

F02=1

C03=15

F03=1

Give I = 10

we get NPV as 1.06