Question: You have been asked to analyze two mutually exclusive projects. Expected Cash Flow Expected Cash Flows Year Project A Project B 0 -171,000 -44,500 1
You have been asked to analyze two mutually exclusive projects.
| Expected Cash Flow | Expected Cash Flows | |
| Year | Project A | Project B |
| 0 | -171,000 | -44,500 |
| 1 | -81,000 | 12,500 |
| 2 | -14,500 | 14,000 |
| 3 | 31,500 | 16,550 |
| 4 | 90,500 | 20,000 |
| 5 | 122,500 | 21,500 |
| 6 | 167,000 | 23,500 |
| 7 | 202,000 | 26,000 |
| 8 | 265,000 | 33,000 |
| 9 | 325,000 | 42,000 |
a) Construct the NPV profiles for Project A and Project B. (Note: plot the NPVs of both projects on the same graph.) The cost of capital ranges from 0% to 30% by increments of 2%.
b) Calculate each projects IRR
c) Calculate the crossover rate of the two projects.
d) Calculate each projects MIRR at a cost of capital of 14% and reinvestment rate of 10%.
e) Calculate each projects regular payback period.
f) Calculate each projects discounted payback period with a cost of capital of 14%.
g) Calculate each projects profitability index at a cost of capital of 14%.
h) Calculate each projects NPV at a required rate of return of 14%.
i) Calculate each projects NPV at a required rate of return of 28%.
Please solve using excel and show formulas.
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
