NPV Your division is considering two projects with the following cash flows (in
ID: 2645806 • Letter: N
Question
NPV
Your division is considering two projects with the following cash flows (in millions):
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
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 %
Explanation / Answer
Answer- Net Present Value
If WACC - 5%
Project A
Year
Cash Inflow/Outflow ($ million) A
PVIF @ 5% B
Present Value ($ million) - A*B
0
-21
1
-21
1
14
.95
13.3
2
9
.91
8.19
3
3
.86
2.58
Net Present Value
3.07
Project B
Year
Cash Inflow/Outflow ($ million) A
PVIF @ 5% B
Present Value ($ million) - A*B
0
-35
1
-35
1
20
.95
19
2
8
.91
7.28
3
15
.86
12.9
Net Present Value
4.18
If WACC - 10%
Project A
Year
Cash Inflow/Outflow ($ million) A
PVIF @ 10% B
Present Value ($ million) - A*B
0
-21
1
-21
1
14
.91
12.73
2
9
.83
7.44
3
3
.75
2.25
Net Present Value
1.42
Project B
Year
Cash Inflow/Outflow ($ million) A
PVIF @ 10% B
Present Value ($ million) - A*B
0
-35
1
-35
1
20
.91
18.18
2
8
.83
6.61
3
15
.75
11.25
Net Present Value
1.04
If WACC - 15%
Project A
Year
Cash Inflow/Outflow ($ million) A
PVIF @ 15% B
Present Value ($ million) - A*B
0
-21
1
-21
1
14
.87
12.17
2
9
.76
6.81
3
3
.66
1.97
Net Present Value
-.05
Project B
Year
Cash Inflow/Outflow ($ million) A
PVIF @ 15% B
Present Value ($ million) - A*B
0
-35
1
-35
1
20
.87
17.4
2
8
.76
6.08
3
15
.66
9.86
Net Present Value
-1.66
Answer- IRR
Internal Rate of Return - where NPV is ZERO
For Project A- 14.83%
For Project B- 11.84%
Year
Cash Inflow/Outflow ($ million) A
PVIF @ 5% B
Present Value ($ million) - A*B
0
-21
1
-21
1
14
.95
13.3
2
9
.91
8.19
3
3
.86
2.58
Net Present Value
3.07
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