Scale Differences The Pinkerton Publishing Company is considering two mutually exclusive expansion plans. Plan A calls...

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Scale Differences The Pinkerton Publishing Company is considering two mutually exclusive expansion plans. Plan A calls for the expenditure of $50 million on a large-scale, integrated plant that will provide an expected cash flow stream of $8 million per year for 20 years. Plan B calls for the expenditure of $15 million to build a somewhat less efficient, more labor-intensive plant that has an expected cash flow stream of $3.4 million per year for 20 years. The firm's cost of capital is 10%. a. Calculate each project's NPV. Do not round intermediate calculations. Round your answers to the nearest dollar. Project A: $ Project B: $ Calculate each project's IRR. Round your answers to two decimal places. Project A: Project B: % % b. Set up a Project A by showing the cash flows that will exist if the firm goes with the large plant rather than the smaller plant. Round your answers to the nearest dollar. Use a minus sign to enter cash outflows, if any. Year 0 1-20 Project A Cash Flows $ $ What is the NPV for this Project A? Do not round intermediate calculations. Round your answer to the nearest dollar. Use a minus sign to enter negative value, if any. $ What is the IRR for this Project A? Round your answer to two decimal places. % c. Select the correct graph for the NPV profiles for Plan A, Plan B, and Project A. 150 NPV(Millions of Dollars) 100 75 50 UN 125+ A 25 -5 5 10 -25 Cost of Capital(%) A NPV(Millions of Dollars) + 150 125 A 100 75 50 B 25 B -5 5 10 25 -5 -25 Cost of Capital(%) NPV(Millions of Dollars) C 150- 125 100 B 75- 50 25 5 10 20 -25 Cost of Capital(%) 150 125+ A 100+ 75 50 NPV(Millions of Dollars) 25 B 75 -5 5 10 -25 Cost of Capital(%) D Scale Differences The Pinkerton Publishing Company is considering two mutually exclusive expansion plans. Plan A calls for the expenditure of $50 million on a large-scale, integrated plant that will provide an expected cash flow stream of $8 million per year for 20 years. Plan B calls for the expenditure of $15 million to build a somewhat less efficient, more labor-intensive plant that has an expected cash flow stream of $3.4 million per year for 20 years. The firm's cost of capital is 10%. a. Calculate each project's NPV. Do not round intermediate calculations. Round your answers to the nearest dollar. Project A: $ Project B: $ Calculate each project's IRR. Round your answers to two decimal places. Project A: Project B: % % b. Set up a Project A by showing the cash flows that will exist if the firm goes with the large plant rather than the smaller plant. Round your answers to the nearest dollar. Use a minus sign to enter cash outflows, if any. Year 0 1-20 Project A Cash Flows $ $ What is the NPV for this Project A? Do not round intermediate calculations. Round your answer to the nearest dollar. Use a minus sign to enter negative value, if any. $ What is the IRR for this Project A? Round your answer to two decimal places. % c. Select the correct graph for the NPV profiles for Plan A, Plan B, and Project A. 150 NPV(Millions of Dollars) 100 75 50 UN 125+ A 25 -5 5 10 -25 Cost of Capital(%) A NPV(Millions of Dollars) + 150 125 A 100 75 50 B 25 B -5 5 10 25 -5 -25 Cost of Capital(%) NPV(Millions of Dollars) C 150- 125 100 B 75- 50 25 5 10 20 -25 Cost of Capital(%) 150 125+ A 100+ 75 50 NPV(Millions of Dollars) 25 B 75 -5 5 10 -25 Cost of Capital(%) D