NPV profiles: timing differences
An oil drilling company must choose between two mutually exclusive extraction projects, and each costs $11 million. Under Plan A, all the oil would be extracted in 1 year, producing a cash flow at t = 1 of $13.2 million. Under Plan B, cash flows would be $1.9546 million per year for 20 years. The firm's WACC is 12.8%.
1. Construct NPV profiles for Plans A and B. Round your answers to two decimal places.
Discount Rate...............NPV Plan A.....................NPV Plan B
0%............................$______million..................$______million
10%..........................$______million..................$______million
12%..........................$______million..................$______million
15%..........................$______million..................$______million
17%..........................$______million..................$______million
20%..........................$______million..................$______million
2. Identify each project's IRR. Round your answers to two decimal places.