Problem 10 21 Payback, NPV, and MIRR Your division is considering two investment projects, each of which requires an up front expenditure of $22 million You estimate that the cost of capital is 12 and that the investments will produce the following after tax cash flows (in millions of dollars) Year Project A Project B 1 5 20 2 10 10 3 15 8 4 20 6 What is the regular payback period for each of the projects Round your answers to two decimal places Project A years Project B years What is the discounted payback period for each of the projects Round your answers to two decimal places Project A years Project B years If the two projects are independent and the cost of capital is 12 , which project or projects should the firm undertake Select Project AProject BBoth projectsItem 5 If the two projects are mutually exclusive and the cost of capital is 5 , which project should the firm undertake Select Project AProject BItem 6 If the two projects are mutually exclusive and the cost of capital is 15 , which project should the firm undertake Select Project AProject BItem 7 What is the crossover rate Round your answer to two decimal places If the cost of capital is 12 , what is the modified IRR (MIRR) of each project Round your answers to two decimal places Project A Project B

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Question: Problem 10-21 Payback, NPV, and MIRR Your division is considering two investment projects, each of which requires an up-front expenditure of $22 million. You estimate

Problem 10-21 Payback, NPV, and MIRR

Your division is considering two investment projects, each of which requires an up-front expenditure of $22 million. You estimate that the cost of capital is 12% and that the investments will produce the following after-tax cash flows (in millions of dollars):

Year	Project A	Project B
1	5	20
2	10	10
3	15	8
4	20	6

What is the regular payback period for each of the projects? Round your answers to two decimal places. Project A years Project B years
What is the discounted payback period for each of the projects? Round your answers to two decimal places. Project A years Project B years
If the two projects are independent and the cost of capital is 12%, which project or projects should the firm undertake? -Select-Project AProject BBoth projectsItem 5
If the two projects are mutually exclusive and the cost of capital is 5%, which project should the firm undertake? -Select-Project AProject BItem 6
If the two projects are mutually exclusive and the cost of capital is 15%, which project should the firm undertake? -Select-Project AProject BItem 7
What is the crossover rate? Round your answer to two decimal places. %
If the cost of capital is 12%, what is the modified IRR (MIRR) of each project? Round your answers to two decimal places. Project A % Project B %

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