Problem 11-6 NPV Your division is considering two projects with the following ca
ID: 2760894 • 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 %
If the WACC were 5% and A and B were mutually exclusive, which would you choose? (Hint: The crossover rate is 10.72%.)
If the WACC were 10% and A and B were mutually exclusive, which would you choose? (Hint: The crossover rate is 10.72%.)
If the WACC were 15% and A and B were mutually exclusive, which would you choose? (Hint: The crossover rate is 10.72%.)
Explanation / Answer
What are the projects' NPVs assuming the WACC is 5%? Round your answer to two decimal places.
Answer:
What are the projects' NPVs assuming the WACC is 10%? Round your answer to two decimal places.
Answer:
What are the projects' NPVs assuming the WACC is 15%? Round your answer to two decimal places
Answer:
What are the projects' IRRs assuming the WACC is 5%?,10%,15%
Answer:
If the WACC were 5% and A and B were mutually exclusive, which would you choose? (Hint: The crossover rate is 10.72%.)
Answer: Project A
If the WACC were 10% and A and B were mutually exclusive, which would you choose? (Hint: The crossover rate is 10.72%.)
Answer: Project A
If the WACC were 15% and A and B were mutually exclusive, which would you choose? (Hint: The crossover rate is 10.72%.)
Answer: Project B
WACC 5% 5% Particulars Project A Project B -31 -19 7 13 12 6 22 5 NPV 5.56 3.14