Question

Quantitative Problem: Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACCC is 9 %. 0 1 2 4 Project A 1,050 600 350 230 270 Project B -1,050 270 330 390 780 What is Project Delta's IRR? Do not round intermediate calculations. Round your answer to two decimal places. % What is the significance of this IRR It is the -Select ,after this point when mutually exclusive projects are considered there is no conflict in project acceptance between the NPV and IRR approaches Review the graphs below. Select the graph that correctly represents the correct NPV profile for Projects A and B by using the following drop down menu.

Answer 1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

- 2x fir E O ? A @ 3 Calculate Now Calculation Calculate Sheet Options Calculation PU P W PX projects (Autosaved) (Autosaved) (Autosaved) - Microsoft Excel (Product Activation Failed) File Home Insert Page Layout Formulas Data Review View Add-Ins a Define Name Trace Precedents 5. Show Formulas Use in Formula Trace Dependents Error Checking Insert AutoSum Recently Financial Logical Text Date & Lookup & Math More Name Watch Function Used - Time Reference & Trig Functions Manager Create from Selection Remove Arrows" Evaluate Formula Window Function Library Defined Names Formula Auditing PU16 Fc POPP PQPR PS РТ PV 1 BELLINGER project project incremental CFAT year B-A 0 -1050 -1050 1 600 -330 2 350 330 -20 230 390 160 270 780 510 NM + 0 270 0 0 excel formula IRR(PS4:PS8) 10 delta IRR 27.33% 11 12 13 14 15 significant of delta IRR it is THE CROSSOVER RATE after this point that NPV & IRR methods agree and there is no conflict in project acceptance 16 correct graph: CROSS OVER RATE IS 27.33% SO ANSWER: GRAPHA 17 18 19 W N invest, EAA MI-np-ir REPLACEMENT S HPR GMAM EAC MACRS NPV RELEVANT BETA LEVERED REPLACEMENT BOND IRRnpvbeta RATION PBP ARR ferences: NL296 Rea OPTION TO WAITSTEIN id < > DOI 130% - 0-_ + . * ENG 21-11-2019 . B 9