Question: Scale Differences The Pinkerton Publishing Company is considering two mutually exclusive expansion plans. Plan A calls for the expenditure of $56 million on a large-scale,

 Scale Differences The Pinkerton Publishing Company is considering two mutually exclusive
expansion plans. Plan A calls for the expenditure of $56 million on

Scale Differences The Pinkerton Publishing Company is considering two mutually exclusive expansion plans. Plan A calls for the expenditure of $56 million on a large-scale, integrated plant that will provide an expected cash flow stream of $9 million per year for 20 years. Plan B calls for the expenditure of $12 million to build a somewhat less efficient, more labor intensive plant that has an expected cash flow stream of $3.8 million per year for 20 years. The firm's cost of capital is 11%. a. Calculate each project's NPV. Do not round Intermediate calculations. Round your answers to the nearest dollar. Project A: $ Project : $ Calculate each project's IRR. Round your answers to two decimal places Project A: Project B: b. Set up a Project 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 Project A Cash Flows 1-20 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 A7 Round your answer to two decimal places uring 2020 c. Graph the NPV prohies for Plan A, Plan B, and Project Select the correct graph. NPV Millions of Dollars) NPV Million of Dollars) NPV Millions of dollars) -25 Cost of capital -25 cost of capital) -25Cost of capital) 501 NPV Millions of dollars) wson-Ev....pdf A

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