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1. You are considering two projects, A and B. Each project will cost $200,000, the WACC is 8.5%, and the projected cash flows are as follows: Year Project A Project B 1 $ 12,580 $90,562 2 37,733 67,920 3 70,437 50,312 st 4 88,050 36,735 5 100,625 25,156 a. b. Calculate the payback period, discounted payback, NPV, PI, IRR, and MIRR. If A and B are mutually exclusive, which should be selected? Create an NPV profile chart for projects A and B. What is the exact crossover rate for these two projects?

1. You are considering two projects, A and B. Each project will cost $200,000, the WACC is 8.5%, and the projected cash flows are as follows: Year Project A Project B 1 $ 12,580 $90,562 2 37,733 67,920 3 70,437 50,312 st 4 88,050 36,735 5 100,625 25,156 a. b. Calculate the payback period, discounted payback, NPV, PI, IRR, and MIRR. If A and B are mutually exclusive, which should be selected? Create an NPV profile chart for projects A and B. What is the exact crossover rate for these two projects?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section: Chapter Questions
Problem 21P
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1. You are considering two projects, A and B. Each project will cost $200,000, the WACC is 8.5%, and the projected cash flows are as follows: Year Project A Project B 1 $ 12,580 $90,562 2 37,733 67,920 3 70,437 50,312 st 4 88,050 36,735 5 100,625 25,156 a. b. Calculate the payback period, discounted payback, NPV, PI, IRR, and MIRR. If A and B are mutually exclusive, which should be selected? Create an NPV profile chart for projects A and B. What is the exact crossover rate for these two projects?
Transcribed Image Text:1. You are considering two projects, A and B. Each project will cost $200,000, the WACC is 8.5%, and the projected cash flows are as follows: Year Project A Project B 1 $ 12,580 $90,562 2 37,733 67,920 3 70,437 50,312 st 4 88,050 36,735 5 100,625 25,156 a. b. Calculate the payback period, discounted payback, NPV, PI, IRR, and MIRR. If A and B are mutually exclusive, which should be selected? Create an NPV profile chart for projects A and B. What is the exact crossover rate for these two projects?
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