Please remember when I submit each question it will show if it is wrong or right, please I need correct answers.
Problem 11-6
NPV
Your division is considering two projects with the following cash flows (in millions):
0 1 2 3
Project A -$27 $13 $17 $8
Project B -$25 $14 $11 $2
a. What are the projects' NPVs assuming the WACC is 5%? Round your answer to two decimal places. Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55.
Project A $ million
Project B $ million
What are the projects' NPVs assuming the WACC is 10%? Round your answer to two decimal places. Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55.
Project A $ million
Project B $ million
What are the projects' NPVs assuming the WACC is 15%? Round your answer to two decimal places. Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55.
Project A $ million
Project B $ million
b. What are the projects' IRRs assuming the WACC is 5%? Round your answer to two decimal places.
Project A %
Project B %
What are the projects' IRRs assuming the WACC is 10%? Round your answer to two decimal places.
Project A %
Project B %
What are the projects' IRRs assuming the WACC is 15%? Round your answer to two decimal places.
Project A %
Project B %
c. If the WACC were 5% and A and B were mutually exclusive, which would you choose? (Hint: The crossover rate is 90.37%.)
If the WACC were 10% and A and B were mutually exclusive, which would you choose? (Hint: The crossover rate is 90.37%.)
If the WACC were 15% and A and B were mutually exclusive, which would you choose? (Hint: The crossover rate is 90.37%.)
Problem 11-10
Capital budgeting criteria: mutually exclusive projects
A firm with a WACC of 10% is considering the following mutually exclusive projects:
0 1 2 3 4 5
Project A -$400 $45 $45 $45 $190 $190
Project B -$500 $350 $350 $60 $60 $60
Which project would you recommend?
Select the correct answer.
I. Neither A or B, since each project's NPV < 0.
II. Both Projects A and B, since both projects have NPV's > 0.
III. Both Projects A and B, since both projects have IRR's > 0.
IV. Project B, since the NPVB > NPVA.
V. Project A, since the NPVA > NPVB.
NPV
Project K costs $50,000, its expected cash inflows are $9,000 per year for 9 years, and its WACC is 9%. What is the project's NPV? Round your answer to the nearest cent.
Problem 11-11
Capital budgeting criteria: mutually exclusive projects
Project S costs $10,000 and its expected cash flows would be $7,000 per year for 5 years. Mutually exclusive Project L costs $27,000 and its expected cash flows would be $10,200 per year for 5 years. If both projects have a WACC of 12%, which project would you recommend?
Select the correct answer.
I. Project S, since the NPVS > NPVL.
II. Neither S or L, since each project's NPV < 0.
III. Both Projects S and L, since both projects have IRR's > 0.
IV. Both Projects S and L, since both projects have NPV's > 0.
V. Project L, since the NPVL > NPVS.
Problem 11-2
IRR
Project K costs $69,862.90, its expected cash inflows are $14,000 per year for 10 years, and its WACC is 11%. What is the project's IRR? Round your answer to two decimal places.
%
Problem 11-12
IRR and NPV
A company is analyzing two mutually exclusive projects, S and L, with the following cash flows:
0 1 2 3 4
Project S -$1,000 $861.63 $250 $15 $15
Project L -$1,000 $0 $260 $400 $813.35
The company's WACC is 8.5%. What is the IRR of the better project? (Hint: The better project may or may not be the one with the higher IRR.) Round your answer to two decimal places.