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 9%.

A. Calculate each project's NPV. Round your answers to two decimal places. Do not round your intermediate calculations. Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. ////Plan A: $ ____ million / Plan B: $ ____ million

B. Calculate each project's IRR. Round your answer to two decimal places. / Plan A: ____ % / Plan B: ____ %

C. By graphing the NPV profiles for Plan A and Plan B, approximate the crossover rate to the nearest percent. ____ %

D. Calculate the crossover rate where the two projects' NPVs are equal. Round your answer to two decimal places. / ____ %

E. Why is NPV better than IRR for making capital budgeting decisions that add to shareholder value? / ______

WACC	9.00%
(Dollars in Millions)		0	1	2	3	4	5	6	7	8	9	10	11	12	13	14	15	16	17	18	19	20
Plan A		($40.00)	$6.39	$6.39	$6.39	$6.39	$6.39	$6.39	$6.39	$6.39	$6.39	$6.39	$6.39	$6.39	$6.39	$6.39	$6.39	$6.39	$6.39	$6.39	$6.39	$6.39
Plan B		($13.00)	$2.91	$2.91	$2.91	$2.91	$2.91	$2.91	$2.91	$2.91	$2.91	$2.91	$2.91	$2.91	$2.91	$2.91	$2.91	$2.91	$2.91	$2.91	$2.91	$2.91