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

0 | 1 | 2 | 3 |

Project A |
-$29 | $15 | $13 | $3 |

Project B |
-$16 | $8 | $3 | $6 |

- What are the projects’ Np Vs assuming the WACK is 5%? Round your answer to two decimal places. Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55.
Project A $ million

Project B $ million

What are the projects’ Np Vs assuming the WACK is 10%? Round your answer to two decimal places. Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55.

Project A $ million

Project B $ million

What are the projects’ Np Vs assuming the WACK is 15%? Round your answer to two decimal places. Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55.

Project A $ million

Project B $ million

- What are the projects’ Ir Rs assuming the WACK is 5%? Round your answer to two decimal places.
Project A %

Project B %

What are the projects’ Ir Rs assuming the WACC is 10%? Round your answer to two decimal places.

Project A %

Project B %

What are the projects’ Ir Rs assuming the WACK is 15%? Round your answer to two decimal places.

Project A %

Project B %

- If the WACK were 5% and A and B were mutually exclusive, which would you choose? (
*Hint*: The crossover rate is 5.9%.)Pick Project A or B or Neither

If the WACK were 10% and A and B were mutually exclusive, which would you choose? (

*Hint*: The crossover rate is 5.9%.)Pick Project A or B or Neither

If the WACK were 15% and A and B were mutually exclusive, which would you choose? (

*Hint*: The crossover rate is 5.9%.)Pick Project A or B or Neither

A company is analyzing two mutually exclusive projects, S and L, with the following cash flows:

0 1 2 3 4 **Project S**-$1,000 $884.15 $260 $5 $10 **Project L**-$1,000 $10 $240 $400 $769.20 The company’s WACK is 9.5%. What is the IRE of the better project? (

*Hint*: The better project may or may not be the one with the higher IRE.) Round your answer to two decimal places.%

Project K costs $55,801.73, its expected cash inflows are $12,000 per year for 10 years, and its WACK is 10%. What is the project’s IRE? Round your answer to two decimal places

Capital budgeting criteria: mutually exclusive projects

Project S costs $19,000 and its expected cash flows would be $6,500 per year for 5 years. Mutually exclusive Project L costs $42,500 and its expected cash flows would be $14,000 per year for 5 years. If both projects have a WACK of 13%, which project would you recommend?

Select the correct answer.

I. Both Projects S and L, since both projects have IRS’s > 0. II. Both Projects S and L, since both projects have NPR’s > 0. III. Project S, since the NP’S > NP. IV. Neither S or L, since each project’s NOV < 0.