A company is considering two mutually exclusive expansion plans. Plan A requires a $41 million expenditure on a large-scale integrated plant that would provide expected cash flows of $6.55 million per year for 20 years. Plan B requires a $12 million expenditure to build a somewhat less efficient, more labor-intensive plant with an expected cash flow of $2.69 million per year for 20 years. The firm's WACC is 10%. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Open spreadsheet Calculate each project's NPV. Round your answers to two decimal places. Do not round your intermediate calculations. Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55.Plan A: $ fill in the blank 2 millionPlan B: $ fill in the blank 3 millionCalculate each project's IRR. Round your answer to two decimal places.Plan A: fill in the blank 4%Plan B: fill in the blank 5%By graphing the NPV profiles for Plan A and Plan B, approximate the crossover rate to the nearest percent.fill in the blank 6%Calculate the crossover rate where the two projects' NPVs are equal. Round your answer to two decimal places.fill in the blank 7% 123456789U9File121314151617181920212223242526272829303132333435363738394041424344454647484950515253545556575859G Wizard Co. currently has only a real estat...5ANPV profilesWACCPlan B1011 NPVANPVB(Dollars in Millions)Plan Atemplate Saved ✓Project NPV Calculations:NPV Profiles:DiscountProject IRR Calculations:IRRAIRRB$1.00$0.90$0.80$0.70$0.60$0.50$0.40$0.30$0.20$0.10$0.00<>Plan APlan BHome Insert0%Project Delta0%5%10%15%20%22%25%BCrossover Rate= IRRA10.00%NPVACalculation of Crossover Rate:$0.00$0.00$0.00$0.00$0.00$0.00$0.00$0.005%Formulas▼Workbook StatisticsArialC0-$41.00-$12.00Formulas#N/A#N/A#N/A#N/ANPVB$0.00$0.00$0.00$0.00$0.00$0.00$0.00$0.0010%0-$41.00#N/AFormula#N/ASheet1DrawDfxENPV Profiles123$6.55 $6.55 $6.55Page Layout$2.69 $2.69 $2.69#N/AF15%-$12.00 $2.69 $2.69 $2.69+V 10123$6.55 $6.55 $6.55#N/A #N/A20%G4$6.55$2.69$6.55$2.69#N/AHFormulasB22%I56$6.55 $6.55$2.69 $2.69MindTap - Cengage LearningJ7$6.55$2.69125%567$6.55 $6.55 $6.55$2.69 $2.69 $2.69#N/A #N/A #N/AK8$6.558$6.55$2.69Data$2.69 $2.69#N/AL9$6.559$6.55$2.69#N/AM10$6.55$2.6910$6.55$2.69#N/AReviewV✓Search for tools, help, and more (Option + Q)N11$6.55O111213$6.55 $6.55 $6.55$2.69$2.69 $2.69 $2.69#N/AViewP1213$6.55 $6.55#N/A$2.69 $2.69#N/AabQHelp14$6.55→$2.69#N/AR$2.69 $2.6915$6.551415$6.55 $6.55$2.69#N/A▼ng.cengage.comExcel Online Student WorkSGeneralT$2.69 $2.6916171819$6.55 $6.55 $6.55 $6.551617$6.55 $6.55U$2.69 $2.69V$2.69 $2.691819$6.55 $6.55$2.69 $2.69#N/A #N/A #N/A#N/AW20$6.55$2.6920$6.55$2.69#N/AXVY←0.00Z.00→.0AAABACStart PageADAEAFSTNTTAGAHG how to screenshot on macbook - Google...AlEv APVAJEditing ✓AKALAMGive Feedback to Microsoft+ANCommentsAOTAP50% +AQ

The difference between the current value of cash inflows and outflow of cash over a period of time…

A company is considering two mutually exclusive expansion plans. Plan A requires a $41 million expenditure on a large-scale integrated plant that would provide expected cash flows of $6.55 million per year for 20 years. Plan B requires a $12 million expenditure to build a somewhat less efficient, more labor-intensive plant with an expected cash flow of $2.69 million per year for 20 years. The firm's WACC is 10%. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Open spreadsheet Calculate each project's NPV. Round your answers to two decimal places. Do not round your intermediate calculations. Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Plan A: $ fill in the blank 2 million Plan B: $ fill in the blank 3 million Calculate each project's IRR. Round your answer to two decimal places. Plan A: fill in the blank 4% Plan B: fill in the blank 5% By graphing the NPV profiles for Plan A and Plan B, approximate the crossover rate to the nearest percent. fill in the blank 6% Calculate the crossover rate where the two projects' NPVs are equal. Round your answer to two decimal places. fill in the blank 7%

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

See similar textbooks

Related questions

Question

A company is considering two mutually exclusive expansion plans. Plan A requires a $41 million expenditure on a large-scale integrated plant that would provide expected cash flows of $6.55 million per year for 20 years. Plan B requires a $12 million expenditure to build a somewhat less efficient, more labor-intensive plant with an expected cash flow of $2.69 million per year for 20 years. The firm's WACC is 10%. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below.

Open spreadsheet

Calculate each project's NPV. Round your answers to two decimal places. Do not round your intermediate calculations. Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55.

Plan A: $ fill in the blank 2 million

Plan B: $ fill in the blank 3 million

Calculate each project's IRR. Round your answer to two decimal places.

Plan A: fill in the blank 4%

Plan B: fill in the blank 5%
By graphing the NPV profiles for Plan A and Plan B, approximate the crossover rate to the nearest percent.

fill in the blank 6%
Calculate the crossover rate where the two projects' NPVs are equal. Round your answer to two decimal places.

fill in the blank 7%

1
2
3
4
5
6
7
8
9
U9
File
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
G Wizard Co. currently has only a real estat...
5
A
NPV profiles
WACC
Plan B
10
11 NPVA
NPVB
(Dollars in Millions)
Plan A
template Saved ✓
Project NPV Calculations:
NPV Profiles:
Discount
Project IRR Calculations:
IRRA
IRRB
$1.00
$0.90
$0.80
$0.70
$0.60
$0.50
$0.40
$0.30
$0.20
$0.10
$0.00
<>
Plan A
Plan B
Home Insert
0%
Project Delta
0%
5%
10%
15%
20%
22%
25%
B
Crossover Rate= IRRA
10.00%
NPVA
Calculation of Crossover Rate:
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
5%
Formulas
▼
Workbook Statistics
Arial
C
0
-$41.00
-$12.00
Formulas
#N/A
#N/A
#N/A
#N/A
NPVB
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
10%
0
-$41.00
#N/A
Formula
#N/A
Sheet1
Draw
D
fx
E
NPV Profiles
1
2
3
$6.55 $6.55 $6.55
Page Layout
$2.69 $2.69 $2.69
#N/A
F
15%
-$12.00 $2.69 $2.69 $2.69
+
V 10
1
2
3
$6.55 $6.55 $6.55
#N/A #N/A
20%
G
4
$6.55
$2.69
$6.55
$2.69
#N/A
H
Formulas
B
22%
I
5
6
$6.55 $6.55
$2.69 $2.69
MindTap - Cengage Learning
J
7
$6.55
$2.69
1
25%
5
6
7
$6.55 $6.55 $6.55
$2.69 $2.69 $2.69
#N/A #N/A #N/A
K
8
$6.55
8
$6.55
$2.69
Data
$2.69 $2.69
#N/A
L
9
$6.55
9
$6.55
$2.69
#N/A
M
10
$6.55
$2.69
10
$6.55
$2.69
#N/A
Review
V
✓
Search for tools, help, and more (Option + Q)
N
11
$6.55
O
11
12
13
$6.55 $6.55 $6.55
$2.69
$2.69 $2.69 $2.69
#N/A
View
P
12
13
$6.55 $6.55
#N/A
$2.69 $2.69
#N/A
ab
Q
Help
14
$6.55
→
$2.69
#N/A
R
$2.69 $2.69
15
$6.55
14
15
$6.55 $6.55
$2.69
#N/A
▼
ng.cengage.com
Excel Online Student Work
S
General
T
$2.69 $2.69
16
17
18
19
$6.55 $6.55 $6.55 $6.55
16
17
$6.55 $6.55
U
$2.69 $2.69
V
$2.69 $2.69
18
19
$6.55 $6.55
$2.69 $2.69
#N/A #N/A #N/A
#N/A
W
20
$6.55
$2.69
20
$6.55
$2.69
#N/A
X
V
Y
←0
.00
Z
.00
→.0
AA
AB
AC
Start Page
AD
AE
AF
ST
NTT
AG
AH
G how to screenshot on macbook - Google...
Al
Ev APV
AJ
Editing ✓
AK
AL
AM
Give Feedback to Microsoft
+
AN
Comments
AO
T
AP
50% +
AQ

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.