NPV (12 part answer) Your division is considering two projects with the followin
ID: 2797651 • Letter: N
Question
NPV (12 part answer)
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. 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 _____%
NPV (12 part answer)
Your division is considering two projects with the following cash flows (in millions):
0 1 2 3 Project A -$31 $7 $12 $22 Project B -$19 $13 $6 $5What 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 _____%
Explanation / Answer
Part 1
Project A:
CF0 = -31
CF1 = 7
CF2 = 12
CF3 = 22
Discount Rate = 5%
NPV = -31 + 7/ (1.05) + 12/ (1.05)2 + 22/(1.05)3
NPV = 5.56
Project B:
CF0 = -19
CF1 = 13
CF2 = 6
CF3 = 5
Discount Rate = 5%
NPV = -19 + 13/ (1.05) + 6/ (1.05)2 + 5/(1.05)3
NPV = 3.14
Part 2
Project A:
CF0 = -31
CF1 = 7
CF2 = 12
CF3 = 22
Discount Rate = 10%
NPV = -31 + 7/ (1.1) + 12/ (1.1)2 + 22/(1.1)3
NPV = 1.81
Project B:
CF0 = -19
CF1 = 13
CF2 = 6
CF3 = 5
Discount Rate = 10%
NPV = -19 + 13/ (1.1) + 6/ (1.1)2 + 5/(1.1)3
NPV = 1.53
Part 3
Project A:
CF0 = -31
CF1 = 7
CF2 = 12
CF3 = 22
Discount Rate = 15%
NPV = -31 + 7/ (1.15) + 12/ (1.15)2 + 22/(1.15)3
NPV = -1.37
Project B:
CF0 = -19
CF1 = 13
CF2 = 6
CF3 = 5
Discount Rate = 15%
NPV = -19 + 13/ (1.15) + 6/ (1.15)2 + 5/(1.15)3
NPV = 0.13
Part 4
Part 1
Project A:
CF0 = -31
CF1 = 7
CF2 = 12
CF3 = 22
-31 = 7/ (1 + r) + 12/ (1 + r)2 + 22/(1 + r)3
r = 12.74%
Project B:
CF0 = -19
CF1 = 13
CF2 = 6
CF3 = 5
-19 = 13/ (1 + r) + 6/ (1 + r)2 + 5/(1 + r)3
r = 15.49%
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