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 1175. a. Calculate each project's NPY. Do not round intermediate calculations. Round your answers to the nearest dollar. Project A: s Project Bi $ Calculate each troject's tR.R. Round your answers to two decimal places. Project A: Project B: b. Set up a Project by thowing the cash flows that will exist if the firm goes with the large plant rather than the smaller piant. Round your answers to the nearest dolar. Use a minus sign to enter cash outflows, if any. What is the NPY for this Project A? Do not round intermediate calculations. Round your answer to the nesrest dollar, Use a minus sign to enter negative value, if any. 5 What is the IRR for this Project ? Round your answer to two decimal places. C. Graph the NPV proflies for Plan A, Pian B, and Project A. Select the correct graph. A c nearest doliar. Use a minus sign to enter cash outflows, if any. What is the NPV for this Project > Do not round intermediate calculations. Round vour answer to the nearest dollar. Use a minus iton to enter negative value, if any. 1 What is the 198 for this Project A ? Round your answer to two decimal places. C. Graph the NPV profiles for Plan A, Man B, and Project A. Select the correct graph. A D

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