Question

Q Search this cours Blueprint Problems Ch 11 Brigham Quantitative Problemi 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 WACC is 11%. Project A Project B 1,100 - 1,100 590 230 360 300 220 360 280 700 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 I 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. NPV Profiles A NPV Profiles B INPV) 600 500 4007 300T 2007 1001 INIVS 6001 500 400 300 2004 1001 20 Con Capital Cara -1001 -2007 -3001 -4001 -1007 2007 -300 -4001 NPV Profiles C NPV Profiles D

Answer 1

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projects (Autosaved) (Autosaved) (Autosaved) - Microsoft Excel (Product Activation Failed) Data Review View Add-Ins File Home Insert Page Layout Formulas - 2x % Cut 4:0 .00 . Insert Delete Format Conditional Format Formatting as Table Styles Cell Styles Σ AutoSum : A Fill Sort & 2 Clear Filter Editing Find & Select Cells PU PV PW PX Calibri 11 A A = = = V Wrap Text General E Copy Paste B I U B- Format Painter SF A Merge Merge & Center - Center $ -% % Clipboard Font Alignment Number PU10 for POPP PQ PR PS PT 1 BELLINGER project project incremental CFAT year B-A 0 -1100 -1100 1 590 230 -360 2 360 300 -60 220 360 140 280 420 0 700 excel formula IRR(PS4:PS8) delta IRR 11.68% 10 11 12 13 14 15 16 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 correct graph: 17 CROSS OVER RATE IS 11.68% SO ANSWER : NPV PROFILE B GRAPH B 18 19 invest, EAA MI-np-ir REPLACEMENT S HPR GMAM EAC MACRS NPV RELEVANT BETA LEVERED REPLACEMENT BOND STEIN II I RRnpvbeta RATION PBP ARR ferences: NL296 OPTION TO WAIT BOU 130% Rea 0 1 @ @ 9 ...B 199 * OENG 28-11-2019