Question

Your division is considering two projects with the following cash flows (in millions): 0 1 2 3 Project A -$35 $4 $14 $20 Project B -$15 $8 $5 $4 a. What are the projects' NPVS assuming the WACC is 5%? Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to two decimal places. Xmillion Project A: $ Project B: $ million What are the projects NPVS assuming the WACC is 10 %? Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to two decimal places. Project A: $ million Project B:$ million What are the projects' NPVS assuming the WACC is 15%? Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to two decimal places. Project A: $ million million Project B: $ b. What are the projects' IRRS assuming the WACC is 5%? Do not round intermediate calculations. Round your answer to two decimal places. Project A: % Project B: % What are the projects IRRS assuming the WACC is 10%? Do not round intermediate calculations. Round your answer to two decimal places. Project A: % Project B: % What are the projects' IRRS assuming the WACC is 15%? Do not round intermediate calculations. Round your answer to two decimal places. Project A: % Project B: %

Answer 1

B8 A I F t PVE Discounted cash flows A 2 Year | 3 | | 4 0 $ 5 1 $ 6 2 $ 7 3 $ 8 IRR 9 - X V fx =IRR(B4:37) B C D E F G H I J K L Cashflows Discounted cash flows A Discounted cash flows B X | Y PVIF@5% PVIF@10% PVIF@15% PVIF@5% PVIF@10% PVIF@15% PVIF@5% PVIF@10% PVIFQ15% A 1 B | C | D | E A x C | A x D | A x E | Bxc | B x D | Bx E. (35) $ (15) 1.000 1.000 1.000 $ (35.00) $ (35.00) $ (35.00) $ (15.00) $ (15.00) $ (15.00) 4 $ 8 0 .952 0.909 0.870 $ 3.81 $ 3.64 $ 3.48 $ 7.62 $ 7.27 $ 6.96 14 $ 5 0 .907 0.826 0.756 $ 12.70 $ 11.57 $ 10.59 $ 4.54 $ 4.13 $ 3.78 20 $ 4 0 .864 0.751 0.658 $ 17.28 $ 15.03 $ 13.15 $ 3.46 $ 3.01 $ 2.63 3.47% 7.45% Net present value -$1.22 -$4.77 -$7.79 $0.61 $0.59 -$1.63 10 11 a) At WACC 5% At WACC 5% Project A Project B $ $ (1.22) 0.61 Project A Project B 3.47% 7.45% 12 13 At WACC 10% Project A Project B $ $ (4.77) (0.59) At WACC 10% Project A Project B 3.47% 7.45% At WACC 15% Project A Project B $ $ (7.79) (1.63) At WACC 15% Project A Project B 3.47% 7.45% At WACC 5%, select Project B At WACC 10%, select Project B At WACC 15%, select Project B

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