Question: An oil-drilling company must choose between two mutually exclusive extraction projects, and each requres an inital outlay at t0 of 312.4miligh. Under lan A, wi

 An oil-drilling company must choose between two mutually exclusive extraction projects,
and each requres an inital outlay at t0 of 312.4miligh. Under lan

An oil-drilling company must choose between two mutually exclusive extraction projects, and each requres an inital outlay at t0 of 312.4miligh. Under lan A, wi the oil would be extracted in 1 year, producing a cash flow at t=1 of $14.88 milson, Under Plan 0 , cash fows would be 52.2034 milion per year for 20 yearh. Mhe firms WACC is 12.1% a. Construct NPV profiles for Plans A and B. Enter your answers in millions. For example, an answec of $10,550,000 should be entered as tas5. If an ansunt is zero enter " 0 ". Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round vour answers to twa decomul places your araveis to twoidecimel plasth. identify e Project A Taentify each project's IRR. D not round intermediate calculations. Round your answers to two decimal places. Project Al Project B: Find the crossover rate. Do not round intermediate calculations. Round your answer to two decimal ploces. b. Is it logical to assume that the firm would take on ali availabie independent, average-risk projects with returrs greater than 12.19 ? If all avarlabie projects with returns greater than 12.1 W. have been undertakery does this mean that cash floma from pait investments have an opporfunity coet af anly. 12.1\%6, because ali the company con do with these cash fiows is to replace money that kas a cost of 12.14 ? Does this imply that the WACC is the correct reinvestment rate assumptien for a projects cash fowa

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