Please see the table below. The cells highlighted in yellow contain your answer. Figures in parenthesis, if any, mean negative values. All financials are in $ million. Adjacent cells in blue contain the formula in excel I have used to get the final output.
Part (a)
NPV profiles are there in the rightmost table
IRR of project A = 20.00%
IRR of project B = 17.00%
Cross over rate = IRR of Plan A - Plan B = 16.41%
Part (b)
Yes,
Yes
Yes
An il-drilling company must choose between two mutually exclusive extraction projects, and each requires an intial...
An oil-drilling company must choose between two mutually exclusive extraction projects, and each requires an initial outlay at t = 0 of $11.2 million. Under Plan A, all the oil would be extracted in 1 year, producing a cash flow at t = 1 of $13.44 million. Under Plan B, cash flows would be $1.9901 million per year for 20 years. The firm's WACC is 11.5%. Construct NPV profiles for Plans A and B. Enter your answers in millions. For...
An oil-drilling company must choose between two mutually exclusive extraction projects, and each requires an initial outlay at t = 0 of $11.6 million. Under Plan A, all the oil would be extracted in 1 year, producing a cash flow at t = 1 of $13.92 million. Under Plan B, cash flows would be $2.0612 million per year for 20 years. The firm's WACC is 12.4%. Construct NPV profiles for Plans A and B. Enter your answers in millions. For...
An oil-drilling company must choose between two mutually exclusive extraction projects, and each requires an initial outlay at t 0 of $12.6 million. Under Plan A, all the oil would be extracted in 1 year, producing a cash flow at t 1 of $15.12 million. Under Plan B, cash flows would be $2.2389 million per year for 20 years. The firm's WACC is 12.5% a. Construct NPV profiles for Plans A and B. Enter your answers in millions. For example,...
An oil-drilling company must choose between two mutually exclusive extraction projects, and each requires an initial outlay at t = 0 of $11.2 million. Under Plan A, all the oil would be extracted in 1 year, producing a cash flow at t = 1 of $13.44 million. Under Plan B, cash flows would be $1.9901 million per year for 20 years. The firm's WACC is 12.8%. Construct NPV profiles for Plans A and B. Enter your answers in millions. For...
An oil-drilling company must choose between two mutually exclusive extraction projects, and each requires an initial outlay at t = 0 of $11.2 million. Under Plan A, all the oil would be extracted in 1 year, producing a cash flow at t = 1 of $13.44 million. Under Plan B, cash flows would be $1.9901 million per year for 20 years. The firm's WACC is 12.3%. Construct NPV profiles for Plans A and B. Enter your answers in millions. For...
An oil-drilling company must choose between two mutually exclusive extraction projects, and each requires an initial outlay at t = 0 of $12.4 million. Under Plan A, all the oil would be extracted in 1 year, producing a cash flow at t = 1 of $14.88 million. Under Plan B, cash flows would be $2.2034 million per year for 20 years. The firm's WACC is 11%. Construct NPV profiles for Plans A and B. Enter your answers in millions. For...
X ework An oil-drilling company must choose between two mutually exclusive extraction projects, and each requires an initial outlay at t 0 of $12 million. Under Plan A, all the oil would be extracted in 1 year, producing a cash flow at t 1 of $14.4 million. Under Plan B, cash flows would be $2.1323 million per year for 20 years. The firm's WACC is 12.2 %. a. Construct NPV profiles for Plans A and B. Enter your answers in...
An oil-drilling company must choose between two mutually exclusive extraction projects, and each costs $11.4 million. Under Plan A, all the oil would be extracted in 1 year, producing a cash flow at t = 1 of $13.68 million. Under Plan B, cash flows would be $2.0257 million per year for 20 years. The firm's WACC is 11.3%. Construct NPV profiles for Plans A and B. Round your answers to two decimal places. Do not round your intermediate calculations. Enter...
A company is considering two mutually exclusive expansion plans. Plan A requires a $40 million expenditure on a large-scale integrated plant that would provide expected cash flows of $6.39 million per year for 20 years. Plan B requires a $13 million expenditure to build a somewhat less efficient, more labor-intensive plant with an expected cash flow of $2.91 million per year for 20 years. The firm's WACC is 11%. Calculate each project's NPV. Enter your answers in millions. For example,...
A company is considering two mutually exclusive expansion plans. Plan A requires a $41 million expenditure on a large-scale integrated plant that would provide expected cash flows of $6.55 million per year for 20 years. Plan B requires a $11 million expenditure to build a somewhat less efficient, more labor-intensive plant with an expected cash flow of $2.47 million per year for 20 years. The firm's WACC is 9%. Calculate each project's NPV. Enter your answers in millions. For example,...