Question: Problem 11-15 NPV profiles: timing differences An oil drilling company must choose between two mutually exclusive extraction projects, and each costs $11.8 million. Under Plan
Problem 11-15 NPV profiles: timing differences An oil drilling company must choose between two mutually exclusive extraction projects, and each costs $11.8 million. Under Plan A, all the oil would be extracted in 1 year, producing a cash flow at t = 1 of $14.16 million. Under Plan B, cash flows would be $2.0967 million per year for 20 years. The firm's WACC is 13%. Construct NPV profiles for Plans A and B. 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. If an amount is zero enter "0". Negative value should be indicated by a minus sign. Discount Rate NPV Plan A NPV Plan B 0% $ million $ million 5 $ million $ million 10 $ million $ million 12 $ million $ million 15 $ million $ million 17 $ million $ million 20 $ million $ million Identify each project's IRR. Round your answers to two decimal places. Do not round your intermediate calculations. Project A % Project B % Find the crossover rate. Round your answer to two decimal places. Do not round your intermediate calculations. %
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