Business
Business, 24.05.2021 18:40, mgollaoutlaw35

A company is considering two mutually exclusive expansion plans. Plan A requires a $39 million expenditure on a large-scale integrated plant that would provide expected cash flows of $6.23 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 11%. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. a. Calculate each project's NPV. Round your answer to two decimal places.
Plan A $ million ?
Plan B $ million ?
Calculate each project's IRR. Round your answer to two decimal places.
Plan A % ?
Plan B % ?
b. Graph the NPV profiles for Plan A and Plan B and approximate the crossover rate to the nearest percent?
c. Calculate the crossover rate where the two projects' NPVs are equal. Round your answer to the nearest hundredth?

answer
Answers: 3

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A company is considering two mutually exclusive expansion plans. Plan A requires a $39 million expen...

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