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Category > Business & Finance Posted 20 Jun 2017 My Price 12.00

A company is considering two mutually exclusive expansion plans.

A company is considering two mutually exclusive expansion plans. Plan A requires a $40 million expenditure on a large-scale integrated plant that would provide expected cash flows of $6.39 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 9%.

  1. Calculate each project's NPV. Round your answers to two decimal places. Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55.
    Plan A $ million
    Plan B $ million

    Calculate each project's IRR. Round your answer to two decimal places.
    Plan A %
    Plan B %

  2. Graph the NPV profiles for Plan A and Plan B and approximate the crossover rate to the nearest percent.
    %

  3. Calculate the crossover rate where the two projects' NPVs are equal. Round your answer to the nearest hundredth.
    %

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Status NEW Posted 20 Jun 2017 06:06 AM My Price 12.00

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