Question

ham Chapter 11 End-of-Chapter Problems a Search this course 4. NPV Your division is considering two projects with the following cash flows (in millions): 54 $12 Project A -511 Project B -$20 a. 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 5 million Project B 5 million What are the projects' NPVs assuming the WACC is 10%7 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 b. What are the projects IRRS assuming the WACC IS 597 Round your answer to two decimal places. Do not round your intermediate calculations. Project A Proiect B O 011/24/2018 о не е в е

Answer 1

fIRR(C4:C7) C8 A В C E н J K L N P 1 Project A Project A Project A Cash flows pv@10% Present value Cash flows pv@5% Present value Cash flows pv@15% 0 (11.00) Present value 3 year year year 0$ (11.00) 1.0000 $ 0.9524 $ 0.9070 $ O$ (11.00) 1$ 1.0000 $ (11.00) (11.00) (11.00) 1.0000 $ 4 0.9091$ 1$ 0.8696 S 0.7561 $ 1S 5 4.00 3.81 4.00 3.64 4.00 3.48 2 $ 3 $ 0.8264 $ 2 $ 2 S 3 $ 6.35 7.00 6 7.00 5.79 7.00 5.29 0.8638 $ 0.7513 S 0.6575 S 3$ 0.66 7 1.00 0.86 1.00 0.75 1.00 5.12% NPV IRR (0.83)IRR 5.12% NPV IRR $ 5.12% NPV (1.57) 0.02 9 Project B 10 Project B Project B year Cash flows pv@5% |Present value Cash flows pv@15% 0 (20.00) 1$ Cash flows pv@10% |Present value Present value 11 year year O$ (20.00) 0 $ (20.00) 1$ 12.00 1.0000 S 1.0000 $ 0.9091 $ 1.0000 $ (20.00) (20.00) (20.00) 12 0.9524 S 0.9070 $ 0.8696 $ 1S 13 11.43 12.00 10.91 12.00 10.43 0.7561 $ 2 $ 2 $ 5.00 0.8264 $ 2 $ 3 $ 14 5.00 4.54 4.13 5.00 3.78 3 $ 0.7513 $ 0.6575 $ 3 $ 0.8638 $ 9.00 9.00 15 9.00 7.77 6.76 5.92 16 IRR 15.43% NPV IRR 15.43% NPV $ $ IRR 15.43% NPV 3.74 1.80 0.13 17 18 19 a NPV 15%bIRR 15% c 10% 5.12% 15.43% 15.43% 15% 5% 10% 5% 5% 10% 0.02 $(0.83) $ Project B Project B Project B 20 A $ (1.57) A 5.12% 5.12% 3.74 1.80 $ 21 B $ 5.12% В 0.13 22 23

f IRR (C4:C7) С8 A. C E F G Н J к L M Project A year 0 Project A year 0 Project A year 0 pv@5% Cash flows Present value Cash flows Present value |ЕН4*4 Cash flows pv@15% Present value pv@10% 3 -11 -11 -C4*D4 =M4*N4 1 -11 . 1 -14 / 1.1 15/1.1 =16/1.1 1 =N4 / 1.15M5*N5 =N5 /1.15 - M6*N6 4 -D4/1.05 4 -C5*D5 EH5*15 1 4 5 1 1 7 7 -C6*D6 2 D5/1.05 2 -H6*16 2 7 6 |-D6/1.05 NPV -C7*D7 EN6 /1.15=M7*N7 NPV 1 3 1 -H7"17 7 3 1 =IRR(C4:C7) -SUM(J4:17) =SUM(E4:E7) IRR(H4: H7) =IRR(M4:M7) -SUM(04:07) IRR IRR NPV IRR 8 9 Project B year 0 Project B year 10 Project B Present value Present value Cash flows pv@10% Cash flows pv@15% Present value Cash flows pv@5% year 0 11 |-20 -20 -C12*D12 M12*N12 1 1 El12/1.1 E113/1.1 H12*112 1 EN12/1.15M13*N13 12 -20 -D12/1.05 - H13*113 1 12 -C13*D13 12 12 5 13 1 -D13/1.05 EC14*D14 2 . -N13 / 1.15- M14*N14 EN14 / 1.15M15*N15 5 -H14* 1 14 2 2 14 5 -C15*D15 -H15*1 15 114/1.1 9 D14/1.05 3 15 |-SUM(J12:J15) IRR =IRR (C12:C15) NPV -SUM(E12:E15) =IRR (M12:M15) NPV |=SUM(012:015) =IRR (H12: H15 ) NPV IRR IRR 16 17 18 bIRR 0.05 0.1 0.1 19 aNPV 0.05 0.1 0.15 0.05 0.15 0.15 c -M8 EM8 Project B Project B Project B A -E8 J8 -08 -C8 20 А -H8 EE16 -016 J16 B -H16 21 C16 22 23