NPV and IRR Analysis Cummings Products is considering two mutually exclusive investments whose expected net cash flows are as follows: Expected Net Cash Flows Project A Project B Year o -$400 -$650 1 -528 210 2 -219 210 3 -150 210 4 1,100 210 5 820 210 6 990 210 -325 210 7 a. Select the correct graph for NPV profiles for Projects A and B. A VPVS) 1 VPVS) T 14001 14001 B VPVS) 1 1400 1200 1000 1200 1200 1000 1000 800 Project A 800 Project A 800 Project A 6007 600 600 400 4007 400 Project B Project B 2007 2007 Project B 2001 4 20 25 30 20 25 30 20 25 30 Cost of capital) -5 -2007 Cost of capitak 25 -4001 -5 -200 -400 -5 15 -2007 Cost of capital -4001 D YRICOT Problems D VPMC5) 14001 1200+ 1000+ 800 Project B 600 4007 Project A 2001 cost of capitako 15 20 5 -2007 -4001 30 The correct graph is -Select- b. What is each project's IRR? Do not round intermediate calculations. Round your answers to two decimal places. Project A: % Project B: % c. Calcu the two projects' NPVs, if each project's cost of capital were 10%. Do round intermediat calculatic Rou your answers to the cer Project A: $ Project B: $ Which project, if either, should be selected? -Select- should be selected. Calculate the two projects' NPVs, if each project's cost of capital were 17%. Do not round intermediate calculations. Round your answers to the nearest cent. Project A: $ Project B: $ What would be the proper choice? -Select- is the proper choice. -Select- should be selected. Calculate the two projects' NPVS, if each project's cost of capital were 17%. Do not round intermediate calculations. Round your answers to the nearest cent. Project A: $ Project B: $ What would be the proper choice? -Select- is the proper choice. d. What is each project's MIRR at a cost of capital of 10%? (Hint: Consider Period 7 as the end of Project B's life.) Do not round intermediate calculations. Round your answers to two decimal places. Project A: % Project B: % What is each project's MIRR at a cost of capital of 17%? (Hint: Consider Period 7 as the end of Project B's life.) Do not round intermediate calculations. Round your answers to two decimal places. Project A: % % Project B: e. What is the crossover rate? Do not round intermediate calculations. Round your answer to two decimal places. % What is its significance? I. The crossover rate has no significance in capital budgeting analysis, II. If the cost of capital is greater than the crossover rate, both the NPV and IRR methods will lead to the same project selection. III. If the cost of capital is less than the crossover rate, both the NPV and IRR methods lead to the same project selections. -Select- Check My Work (1 remaining) 0 Icon Key