15.

Quantitative Problem: Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is 9%. 0 1 2 3 4 | 1 1 1 1 600 350 270 Project A Project B -1,050 -1,050 230 390 270 330 780 What is Project Delta's IRR? Do not round intermediate calculations. Round your answer to two decimal places. % What is the significance of this IRR? It is the -Select- after this point when mutually exclusive projects are considered there is no conflict in project acceptance between the NPV and IRR approaches. Review the graphs below. Select the graph that correctly represents the correct NPV profile for Projects A and B by using the following drop down menu. -Select- NPV Profiles A A NPV Profiles B NPV Profiles c NPV (S INPV (5) 600+ 500+ 400 6001 500+ 400 3001 2001 100 TNPV (5 600 500 400 3001 2001 1001 300 2001 100+ 5 10 19 25 30 5 10 15 20 30 5 10 15 20 25 30 -1007 -1007 Cost of Capital -2007 Cost of Capital (% %) -2007 Cost of Capital (%) -1007 -200 -3001 -4001 3001 3001 -4001 -4001 NPV Profiles D NPV (5) 6001 500+ 4000 3001 200 100 5 10 15 20 25 30 -1001 -2001 Cost of Capital