NPV Your division is considering two projects with the following cash flows (in millions): 1 十 Project A Project B -$25 -$20 $5 $10 $17 $10 $9 $6 TAZA CO 100/ 2150/3

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Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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What are the projects' Payback periods?

1-6 NPV Your division is considering two projects with the following cash flows (in millions):
1
2
T
+
Project A
Project B
+
$10
$9
-$25
$5
$17
$6
- $20
$10
What are the projects' NPVS assuming the WACC is 5%? 10%? 15%?
b. What are the projects' IRRS at each of these WACCS?
а.
С.
If the WACC was 5% and A and B were mutually exclusive, which project would you
choose? What if the WACC was 10%? 15%? (Hint: The crossover rate is 7.81%.)
Transcribed Image Text:1-6 NPV Your division is considering two projects with the following cash flows (in millions): 1 2 T + Project A Project B + $10 $9 -$25 $5 $17 $6 - $20 $10 What are the projects' NPVS assuming the WACC is 5%? 10%? 15%? b. What are the projects' IRRS at each of these WACCS? а. С. If the WACC was 5% and A and B were mutually exclusive, which project would you choose? What if the WACC was 10%? 15%? (Hint: The crossover rate is 7.81%.)
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