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A company has a 12% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows: 0 1 2 4 5 6 7 3 + -$300 - $387 -$193 -$100 $600 $600 $850 -$180 Project A Project B -$405 $132 $132 $132 $132 $132 $132 $0 The data has been collected in the Microsoft Excel Online file below

Finance Nov 27, 2020

A company has a 12% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows: 0 1 2 4 5 6 7 3 + -$300 - $387 -$193 -$100 $600 $600 $850 -$180 Project A Project B -$405 $132 $132 $132 $132 $132 $132 $0 The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. ? Open spreadsheet a. What is each project's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations. Project A: $ 200.41 Project B: $ b. What is each project's IRR? Round your answer to two decimal places. Project A: 18.1 % Project B: X% c. What is each project's MIRR? (Hint: Consider Period 7 as the end of Project B's life.) Round your answer to two decimal places. Do not round your intermediate calculations. Project A: 15.10 % Project B: X% d. From your answers to parts a-c, which project would be selected? If the WACC was 18%, which project would be selected?
e. Construct NPV profiles for Projects A and B. Round your answers to the nearest cent. Do not round your intermediate calculations. Negative value should be indicated by a minus sign. Discount Rate NPV Project A NPV Project B 0% $ $ 5 $ $ 10 $ $ 12 $ $ 15 $ $ 18.1 $ $ 23.33 $ $ f. Calculate the crossover rate where the two projects' NPVs are equal. Round your answer to two decimal places. Do not round your intermediate calculations. % g. What is each project's MIRR at a WACC of 18%? Round your answer to two decimal places. Do not round your intermediate calculations. Project A: % Project B: %

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