What are the projects irrs at each of wacc


Problem: 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

Q1. What are the projects' NPVs, assuming the WACC is 5 percent? 10 percent? 15 percent?

Q2. What are the projects' IRRs at each of these WACCs?

Q3. 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 :

Prepared by a verified Expert
Finance Basics: What are the projects irrs at each of wacc
Reference No:- TGS01810805

Now Priced at $25 (50% Discount)

Recommended (93%)

Rated (4.5/5)