NPV Your division is considering two projects with the following cash flows (in

Question

NPV

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

What are the projects' NPVs assuming the WACC is 5%? Round your answer to two decimal places. Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55.
Project A    $   million
Project B    $   million

What are the projects' NPVs assuming the WACC is 10%? Round your answer to two decimal places. Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55.
Project A    $   million
Project B    $   million

What are the projects' NPVs assuming the WACC is 15%? Round your answer to two decimal places. Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55.
Project A    $   million
Project B    $   million

What are the projects' IRRs assuming the WACC is 5%? Round your answer to two decimal places.
Project A   %
Project B   %

What are the projects' IRRs assuming the WACC is 10%? Round your answer to two decimal places.
Project A   %
Project B   %

What are the projects' IRRs assuming the WACC is 15%? Round your answer to two decimal places.
Project A   %
Project B   %

If the WACC were 5% and A and B were mutually exclusive, which would you choose? (Hint: The crossover rate is 8.76%.)
-Select-Project AProject BNeither A, nor BItem 13

If the WACC were 10% and A and B were mutually exclusive, which would you choose? (Hint: The crossover rate is 8.76%.)
-Select-Project AProject BNeither A, nor BItem 14

If the WACC were 15% and A and B were mutually exclusive, which would you choose? (Hint: The crossover rate is 8.76%.)
-Select-Project AProject BNeither A, nor BItem 15

Explanation / Answer

When WACC= 5%

NPV=-21+14/(1+0.05)+9/(1+0.05)^2+3/(1+0.05)^3= 3.0881 million

IRR=14.83%

NPv b= 4.2614

IRR=11.84%

When Wacc = 10%

2.NPV A=1.4192 million

IRR=14.83%

NPV B=1.0631

IRR=11.84%

When WACC= 15%

3. NPV a=-0.0482 million

irr=14.83%

NPV B =-1.6968

IRR=11.84%

3. If WACC is 5% then project B should be selected as NPV is greater than project A.

IF WACC is 10% then project A should be selected as NPV is greater

If WACC is 15% then neither project A nor project B.

Related Questions

Navigate

• Browse (All)
• Browse N
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.