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# NPV

Your division is considering two projects with the following net cash flow (in millions):

Year 0 Year 1 Year 2 Year 3
Project A -\$25 \$5 \$10 \$17
Project B -\$20 \$10 \$9 \$6

a. What are the projects' NPVs, assuming the WACC is 5 percent? 10 percent? 15 percent?
b. What are the projects' IRRs at each of these WACCs?
c. If the WACC is 5 percent and A and B were mutually exclusive, which would you choose? what if the WACC were 10 percent? 15 percent? (Hint: the crossover rate is 7.81 percent)

#### Solution Preview

Please see my response attached in the Excel file. You either need excel formulas or a financial calculator to solve such problems. I have shown you the formulas in Excel. ...

#### Solution Summary

The solution goes into a great amount of detail in order to answer the question. The solution is very well written and easy to understand. Detailed step by step instructions have been provided to answer all the questions being asked. Overall, an excellent response to the question being asked.

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