Question

please complete part A,B and C

9109514&snapshotid=12980728 Ch 11: End-of-Chapter Problems - The Basics of Capital Budgeting Search this course NPV Your division is considering two projects with the following cash flows (in Millions): 0 X Project A Project B -$20 -$13 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 $ million Project B $ million What are the projects' NPVs assuming the WACC is 10%? 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 Role 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' TRRs assuming the WACC is 5%7 Round your answer to two decimal places. Do not round your intermediate calculations Project A Project B What are the projects' TRRs assuming the WACC is 10%7 Round your answer to two decimal places. Do not round your intermediate calculations Project A Project B pon

Answer 1

a & b

B7 =NPV($B$1,B4:B6)+B3 A B 0.05 Project A Project B -20 |-13 8 1 WACC 2 Year 30 4 1 52 63 7 NPV 8 IRR 9 12 3 =NPV($B$1,B4:B6)+B3 I=NPV($B$1,04:C6)+C3 =IRR(B3:36) =IRR(C3:06)

fi C B7 A 1 WACC 2 Year 3 : X B 5% Project A -20 Project B -13 4 0 1 2 9 3 12 5 6 7 NPV 8 IRR 3.29| 12.46% 3.56 21.49%

IRR is independent of the WACC and remains the same for all the 3 values of WACC.

c.

If both are mutually exclusive projects at all three values of WACC, project B will be chsoen as it has a higher NPV.