Your division is considering two projects with the following cash flows (in mill
ID: 2657946 • Letter: Y
Question
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. Do not round your intermediate calculations. Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative value should be indicated by a minus sign.
Project A $ million
Project B $ million
What are the projects' NPVs assuming the WACC is 10%? Round your answer to two decimal places. Do not round your intermediate calculations. Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative value should be indicated by a minus sign.
Project A $ million
Project B $ million
What are the projects' NPVs assuming the WACC is 15%? Round your answer to two decimal places. Do not round your intermediate calculations. Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative value should be indicated by a minus sign.
Project A $ million
Project B $ million
What are the projects' IRRs assuming the WACC is 5%? Round your answer to two decimal places. Do not round your intermediate calculations.
Project A %
Project B %
What are the projects' IRRs assuming the WACC is 10%? Round your answer to two decimal places. Do not round your intermediate calculations.
Project A %
Project B %
What are the projects' IRRs assuming the WACC is 15%? Round your answer to two decimal places. Do not round your intermediate calculations.
Project A %
Project B %
Explanation / Answer
WORKING is provided at end:
What are the projects' NPVs assuming the WACC is 5%? Round your answer to two decimal places. Do not round your intermediate calculations. Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative value should be indicated by a minus sign.
Project A $ 7.47 million
Project B $ 14.98 million
What are the projects' NPVs assuming the WACC is 10%? Round your answer to two decimal places. Do not round your intermediate calculations. Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative value should be indicated by a minus sign.
Project A $ 5.31 million
Project B $ 11.52 million
What are the projects' NPVs assuming the WACC is 15%? Round your answer to two decimal places. Do not round your intermediate calculations. Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative value should be indicated by a minus sign.
Project A $ 3.47 million
Project B $ 8.53 million
Note: IRR is rate at which sum of present value of cash flows is equal to zero hence we will have only one IRR for each project hence changing WACC will make no difference.
What are the projects' IRRs assuming the WACC is 5%? Round your answer to two decimal places. Do not round your intermediate calculations.
Project A 26.89 %
Project B 34.46%%
What are the projects' IRRs assuming the WACC is 10%? Round your answer to two decimal places. Do not round your intermediate calculations.
Project A 26.89 %
Project B 34.46%%
What are the projects' IRRs assuming the WACC is 15%? Round your answer to two decimal places. Do not round your intermediate calculations.
Project A 26.89 %
Project B 34.46%
Rate = 5%
Rate = 10%
Rate = 15%
Rate = 5%
Rate = 10%
Rate = 15%
Year
Project A
Project B
Discounted Cash flow
Discounted Cash flow
Discounted Cash flow
Discounted Cash flow
Discounted Cash flow
Discounted Cash flow
Cfa
CFb
=Cfa/(1+Rate)^Y
=Cfa/(1+Rate)^Y
=Cfa/(1+Rate)^Y
=Cfb/(1+Rate)^Y
=Cfb/(1+Rate)^Y
=Cfb/(1+Rate)^Y
0
-16.00
-26.00
-16.000000
-16.000000
-16.000000
-26.000000
-26.000000
-26.000000
1
7.00
14.00
6.666667
6.363636
6.086957
13.333333
12.727273
12.173913
2
9.00
20.00
8.163265
7.438017
6.805293
18.140590
16.528926
15.122873
3
10.00
11.00
8.638376
7.513148
6.575162
9.502214
8.264463
7.232679
Total = NPV =
7.47
5.31
3.47
14.98
11.52
8.53
------------
Rate = 26.89%
Rate = 34.46%
Year
Project A
Project B
Discounted Cash flow
Discounted Cash flow
Cfa
CFb
=Cfa/(1+Rate)^Y
=Cfb/(1+Rate)^Y
0
-16.00
-26.00
-16.000000
-26.000000
1
7.00
14.00
5.516433
10.412194
2
9.00
20.00
5.589374
11.062631
3
10.00
11.00
4.894192
4.525175
Total = NPV =
0.00
0.00
Rate = 5%
Rate = 10%
Rate = 15%
Rate = 5%
Rate = 10%
Rate = 15%
Year
Project A
Project B
Discounted Cash flow
Discounted Cash flow
Discounted Cash flow
Discounted Cash flow
Discounted Cash flow
Discounted Cash flow
Cfa
CFb
=Cfa/(1+Rate)^Y
=Cfa/(1+Rate)^Y
=Cfa/(1+Rate)^Y
=Cfb/(1+Rate)^Y
=Cfb/(1+Rate)^Y
=Cfb/(1+Rate)^Y
0
-16.00
-26.00
-16.000000
-16.000000
-16.000000
-26.000000
-26.000000
-26.000000
1
7.00
14.00
6.666667
6.363636
6.086957
13.333333
12.727273
12.173913
2
9.00
20.00
8.163265
7.438017
6.805293
18.140590
16.528926
15.122873
3
10.00
11.00
8.638376
7.513148
6.575162
9.502214
8.264463
7.232679
Total = NPV =
7.47
5.31
3.47
14.98
11.52
8.53
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