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Category > Business & Finance Posted 03 Aug 2017 My Price 6.00

NPV profiles: timing differences An oil drilling company must choose between two mutually exclusive

NPV profiles: timing differences

An oil drilling company must choose between two mutually exclusive extraction projects, and each costs $12.4 million. Under Plan A, all the oil would be extracted in 1 year, producing a cash flow at t = 1 of $14.88 million. Under Plan B, cash flows would be $2.2034 million per year for 20 years. The firm's WACC is 11.4%.

Construct NPV profiles for Plans A and B. 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.

Discount Rate NPV Plan A NPV Plan B
0% $    million $    million
5 $    million $    million
10 $    million $    million
12 $    million $    million
15 $    million $    million
17 $    million $    million
20 $    million $    million



Identify each project's IRR. Round your answers to two decimal places.
Project A  %
Project B  %

Find the crossover rate. Round your answer to two decimal places.
%

Answers

Alpha Geek
(8)
Status NEW Posted 03 Aug 2017 02:08 PM My Price 6.00

 I-----------nit-----------ial----------- In-----------ves-----------tme-----------nt -----------124-----------000-----------00 -----------WAC-----------C 1-----------1.9-----------% D-----------isc-----------oun-----------t R-----------ate----------- NP-----------V P-----------lan----------- A -----------NPV----------- Pl-----------an -----------B 0-----------% 2-----------.48----------- 31-----------.67----------- 5%----------- 1.-----------77 -----------15.-----------06 -----------10%----------- 1.-----------13 -----------6.3-----------6 1-----------2% -----------0.8-----------9 4-----------.06----------- 15-----------% 0-----------.54----------- 1.-----------39 -----------17%-----------

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