Capital budgeting criteria a company has an 11 wacc and is, Ask an Expert

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Capital Budgeting Criteria A company has an 11% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows.

Project a -$300 -$387 -$193 -$100 $600 $600 $850 -$180

Project b -$405 $134 $134 $134 $134 $134 $134 $0

a. What is each projects NPV

b. What is each projects IRR

c. What is each projects MIRR?(consider project 7 as the end of project b’s life)

d. From your answers to parts a b and c, which project would be selected? If the WACC was 18%, which project would be selected?

e. Construct NPV profiles for Projects A and B

f. Calculate the crossover rate where the two projects NPV’s are equal

g. What is each project’s MIRR at a WACC of 18%?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92725655

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