question archive A company is considering two mutually exclusive expansion plans
A company is considering two mutually exclusive expansion plans
Subject:BusinessPrice: Bought3
A company is considering two mutually exclusive expansion plans. Plan A requires a $40 million expenditure on a large-scale integrated plant that would provide expected cash flows of $6.39 million per year for 20 years. Plan B requires a $15 million expenditure to build a somewhat less efficient, more labor-intensive plant with an expected cash flow of $3.36 million per year for 20 years. The firm's WACC is 11%.
Calculate each project's NPV. Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Do not round intermediate calculations. Round your answers to two decimal places.
Plan A: $
10.89
million
Plan B: $
11.76
million
Calculate each project's IRR. Round your answers to one decimal place.
Plan A:
15
%
Plan B:
21.98
%
By graphing the NPV profiles for Plan A and Plan B, determine the crossover rate. Round your answer to one decimal place.
%
Calculate the crossover rate where the two projects' NPVs are equal. Round your answer to one decimal place.
%
Is NPV better than IRR for making capital budgeting decisions that add to shareholder value?
-Select-
I don't know how to graph this on excel and don't know how to get npv on excel, If you can walk me through the process I would greatly appreciate it.
