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WACC Analysis

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Table 1: Cash Flow Summary
Year Project A Project B
0 -30000 -30000
1 15000 12500
2 15000 10000
3 10000 15000
4 10000 15000

If Company XYZ has a WACC of 7% and the two projects are independent, which project would you accept based upon NPV rules?

If Company XYZ has a WACC of 26% and the two projects are mutually exclusive which project would you accept based upon NPV rules?

What is the Internal Rate of Return for Project A?

What is the Profitability Index for Project B?

What is the Discounted Profitability Index for Project A (WACC: 8%)?

What is the Payback Period for Project B?

What is the Discounted Payback Period for Project A (WACC: 8%)?

What is the Crossover Rate for Project's A and B?

Calculate Company E's weighted average cost of equity, given the following information: (a) Expected Return on the Market: 14%, (b) Beta for Company E: 1.34, (c) Expected Risk Free Rate of Return: 4%, (d) Debt: \$33,000,000, (e) Equity: \$24,000,000, and (f) Preferred Stock: \$5,000,000.