What are the projects npvs


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

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

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

c. 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)

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