Your division is considering two projects with the following cash flows (in millions): 0 1 2 3
Question:
Your division is considering two projects with the following cash flows (in millions):
What are the projects' NPVs assuming the WACC is 5%? What are the projects' NPVs assuming the WACC is 10%? What are the projects' NPVs assuming the WACC is 15%? What are the projects' IRRs assuming the WACC is 5%? What are the projects' IRRs assuming the WACC is 10%? What are the projects' IRRs assuming the WACC is 15%? If the WACC were 5% and A and B were mutually exclusive, which would you choose? Project A Project B Neither A, nor B Item 13 If the WACC were 10% and A and B were mutually exclusive, which would you choose? (Hint: The crossover rate is 90.37%.) Project A Project B Neither A, nor B Item 14 If the WACC were 15% and A and B were mutually exclusive, which would you choose? (Hint: The crossover rate is 90.37%.) Project A Project B Neither A, nor B Item 15 |