Problem $11\mathrm{.}15($NPV Profiles: Timing Differences$)$

eBook

flow at $t=1$ of $$13\mathrm{.}92$ million. Under Plan $B,$ cash flows would be $$2\mathrm{.}0612$ million per year for $20$ years. The firm's WACC is $12\mathrm{.}2\%.$

indicated by a minus sign. Do not round intermediate calculations. Round your answers to two decimal places.

Discount Rate

NPV Plan A

$0\%$

million

$5$

NPV Plan B

$

million

million

million

million

million

million

million

Identify each project's IRR. Do not round intermediate calculations. Round your answers to two decimal places.

Project A: $,\%$

Project B: $,\%$

Determine the crossover rate. Approximate your answer to the nearest whole number.

$\%$

b$.$ Is it logical to assume that the firm would take on all available independent, average$-$risk projects with returns greater than $12\mathrm{.}2\%?$

these cash flows is to replace money that has a cost of $12\mathrm{.}2\%?$

Does this imply that the WACC is the correct reinvestment rate assumption for a project's cash flows?