Problem 11-6 NPV Your division is considering two projects with the following ca
ID: 2650300 • Letter: P
Question
Problem 11-6
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 %
Explanation / Answer
Answer: Calculation of NPV if WACC is 5%:
$ in millions
PRoject A:
Project B:
Calculation of NPV if WACC is 10%:
Project A
Project B:
Calculation of NPV if WACC is 15%:
Project A:
Project B:
Particulars Time P.V.F (5%) Amount ($) P.V ($) cash outflow(A) 0 1 27 27 cash inflow 1 0.95238 13 12.38094 2 0.9070294 17 15.4195 3 0.863837 8 6.910696 P.V.C.I (B) 34.71114 N.P.V (B-A) 7.711136