Your
division is considering two projects with the following net cash flows.
Project A
0= -$25 1= $5 2= $10 3= $17 Project
B 0= -$20 1= $10 2= $9 3= $6
What are
the projects NPV's assuming the WACC is 5%? 10%? and 15%?
What are
the projects IRR,s at each of these WACC's?
If the
WACC was 5% and project A and B were mutually exclusive, which project would
you choose? What if the WACC was 10%? 15%?
Please
show all calculations in suppoprt of each answer.
TUTORIAL PREVIEW
|
Project A
|
|
Project B
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Year
|
Cash flows
|
PV @5%
|
PV @10%
|
PV @15%
|
|
Year
|
Cash flows
|
PV @5%
|
PV @10%
|
PV @15%
|
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|
0
|
-25
|
$ -25.00
|
$ -25.00
|
$ -25.00
|
|
0
|
-20
|
$ -20.00
|
$ -20.00
|
$ -20.00
|
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