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NPV Your division is considering two projects with the following net cash flows (in millions):

Year 0 Year 1 Year 2 Year 3

Project A: -$25 $5 $10 $17

Project B: -$20 $10 $9 $6

a. What are the projects’ NPVs, assuming the WACC is 5 percent? 10 percent? 15 percent?

b. What are the projects’ IRRs at each of these WACCs?

c. If the WACC were 5 percent and A and B were mutually exclusive, which would you choose? What if the WACC were 10 percent? 15 percent? (Hint: The crossover rate is 7.81 percent.)

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92746245

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