Question: Scale Differences The Pinkerton Publishing Company is considering two mutually exclusive expansion plans. Plan A calls for the expenditure of $44 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 $44 million on

Scale Differences The Pinkerton Publishing Company is considering two mutually exclusive expansion plans. Plan A calls for the expenditure of $44 million on a large-scale, Integrated plant that will provide an expected cash flow stream of $6 million per year for 20 years. Plan B calls for the expenditure of $14 million to build a somewhat less efficient, more laborIntensive plant that has an expected cash flow stream of $2.7 million per year for 20 years. The firm's cost of capital is 9% 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 Project A Cash Flows 0 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 A? Round your answer to two decimal places. c. Graph the NPV profiles for Plan A, Plan B, and Project Select the correct graph. A B 150! c. Graph the NPV profiles for Plan A, Plan B, and Project A. Select the correct graph. B 150 150 125 125 100 100 NPV( Millions of Dollars) NPV Million of Dollars) 75A 75 A 501 50 25 25+ A -5 int 20 25 5 10 -25 Cost of capital -50 5 10 25+ Cost of capita() -501 D 150 1504 125 1251 100 1001 NPV Millions of Dollars) NPVMillions of Dollars) 75 75 B 50 50 25 25 B -5 A- 5 25 Cost of capitak) -50 5 10 -25 cost of capitak -50 The correct graph is Select

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