1. 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: $ _____

   Plan B: $ _____

   Calculate each project's IRR. Round your answer to two decimal places.

   Plan A: _____%

   Plan B: _____%

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

   _____%

3. Calculate the crossover rate where the two projects' NPVs are equal. Round your answer to two decimal places.

   _____%

4. Why is NPV better than IRR for making capital budgeting decisions that add to shareholder value? The input in the box below will not be graded, but may be reviewed and considered by your instructor.

NACC 0.09 Dollars in Millions) Plan 0.00 41.00 1.00 6.65 2.00 8.65 3.00 8.55 4.00 6.65 5.00 6.65 6.00 6.55 7.00 8.55 8.00 6.65 9.00 6.55 10.00 8.55 11.00 8.55 12.00 6.65 13.00 6.65 14.00 6.55 15.00 6.65 16.00 6.65 17.00 6.56 18.00 8.55 19.00 8.55 20.00 8.55 Plan B 12.00 2.69 2.69 2.69 2.69 2.69 2.69 2.69 2.69 2.69 2.69 2.59 2.69 2.69 2.69 2.69 2.69 2.69 2.69 2.69 269 Project NPV Calculations: NPVA NPV Formulas #NA #NA Project IRR Calculations: RRA RR F #NIA #NA NPV Profiles: Discount Rates " NPVA NPVA 0.00 0.05 0.10 0.15 0.20 0.22 0.25 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 NPV Profiles $1.00 $0.90 $0.80+ $0.70 $0.60 + $ $0.50 1 $0.40 $0.30 $0.20 $0.10 $0.00 000 0.03 010 0.15 0.20 0.22 0.25 Calculation of Crossover Rate: 0.00 41.00 1.00 6.55 2.00 6.55 3.00 6.56 4.00 6.55 5.00 6.55 6.00 6.56 7.00 6.56 8.00 6.55 9.00 6.55 10.00 6.55 11.00 655 12.00 6.55 13.00 6.55 14.00 6.56 15.00 6.55 16.00 6.55 17.00 6.55 18.00 6.55 19.00 6.55 20.00 6.55 Plan A Plan B 12.00 2.69 2.69 2.69 2.69 2.69 2.69 2.89 2.69 2.69 2.69 2.69 2.69 2.69 2.69 2.69 2.69 2.89 2.69 2.69 2.69 Project Delta Formulas #N/A #N/A A #N/A #N/A #N/A N #N/A #NIA #NA #NIA #N/A #A #NA #NIA #N/A #N/A #N/A #N/A #NAWNIA WNIA #N/A #N/A NA Formula #NA Crossover Rate = IRRA NACC 0.09 Dollars in Millions) Plan 0.00 41.00 1.00 6.65 2.00 8.65 3.00 8.55 4.00 6.65 5.00 6.65 6.00 6.55 7.00 8.55 8.00 6.65 9.00 6.55 10.00 8.55 11.00 8.55 12.00 6.65 13.00 6.65 14.00 6.55 15.00 6.65 16.00 6.65 17.00 6.56 18.00 8.55 19.00 8.55 20.00 8.55 Plan B 12.00 2.69 2.69 2.69 2.69 2.69 2.69 2.69 2.69 2.69 2.69 2.59 2.69 2.69 2.69 2.69 2.69 2.69 2.69 2.69 269 Project NPV Calculations: NPVA NPV Formulas #NA #NA Project IRR Calculations: RRA RR F #NIA #NA NPV Profiles: Discount Rates " NPVA NPVA 0.00 0.05 0.10 0.15 0.20 0.22 0.25 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 NPV Profiles $1.00 $0.90 $0.80+ $0.70 $0.60 + $ $0.50 1 $0.40 $0.30 $0.20 $0.10 $0.00 000 0.03 010 0.15 0.20 0.22 0.25 Calculation of Crossover Rate: 0.00 41.00 1.00 6.55 2.00 6.55 3.00 6.56 4.00 6.55 5.00 6.55 6.00 6.56 7.00 6.56 8.00 6.55 9.00 6.55 10.00 6.55 11.00 655 12.00 6.55 13.00 6.55 14.00 6.56 15.00 6.55 16.00 6.55 17.00 6.55 18.00 6.55 19.00 6.55 20.00 6.55 Plan A Plan B 12.00 2.69 2.69 2.69 2.69 2.69 2.69 2.89 2.69 2.69 2.69 2.69 2.69 2.69 2.69 2.69 2.69 2.89 2.69 2.69 2.69 Project Delta Formulas #N/A #N/A A #N/A #N/A #N/A N #N/A #NIA #NA #NIA #N/A #A #NA #NIA #N/A #N/A #N/A #N/A #NAWNIA WNIA #N/A #N/A NA Formula #NA Crossover Rate = IRRA