NPV Your division is considering two projects with the following cash flows (in millions): a. What are the projects’ NPVs assuming the WACC is 5%? 10%? 15%? b. What are the projects’ IRRs at each of these WACCs? c. 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%.)
Fundamentals of Financial Manageme...
Fundamentals of Financial Manageme...
Solutions
NPV Your division is considering two projects with the following cash flows (in millions):
- a. What are the projects’ NPVs assuming the WACC is 5%? 10%? 15%?
- b. What are the projects’ IRRs at each of these WACCs?
- c. 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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