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Problem 11.07
A firm with a 14% WACC is evaluating two projects for this year's capital budget. After-tax cash
flows, including depreciation, are as follows: a. Calculate NPV for each project. Do not round
intermediate calculations. Round your answers to the nearest cent. Project M : $ Project N: $
Calculate IRR for each project. Do not round intermediate calculations. Round your answers to
two decimal places. Project M : % Project N: % Calculate MIRR for each project. Do not round
intermediate calculations. Round your answers to two decimal places. Project M: % Project N: %
Calculate MIRR for each project. Do not round intermediate calculations. Round your answers to
two decimal places. Project M: % Project N: % Calculate payback for each project. Do not round
intermediate calculations. Round your answers to two decimal places. Project M: years Project
N: years Calculate discounted payback for each project. Do not round intermediate calculations.
Round your answers to two decimal places. Project M: years Project N: years b. Assuming the
projects are independent, which one(s) would you recommend? c. If the projects are mutually
exclusive, which would you recommend? -Select- d. Notice that the projects have the same cash
flow timing pattern. Why is there a conflict between NPV and IRR?

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Problem 11-07 A firm with a 14- WACC is evaluating two projects for th.docx

  • 1. Problem 11.07 A firm with a 14% WACC is evaluating two projects for this year's capital budget. After-tax cash flows, including depreciation, are as follows: a. Calculate NPV for each project. Do not round intermediate calculations. Round your answers to the nearest cent. Project M : $ Project N: $ Calculate IRR for each project. Do not round intermediate calculations. Round your answers to two decimal places. Project M : % Project N: % Calculate MIRR for each project. Do not round intermediate calculations. Round your answers to two decimal places. Project M: % Project N: % Calculate MIRR for each project. Do not round intermediate calculations. Round your answers to two decimal places. Project M: % Project N: % Calculate payback for each project. Do not round intermediate calculations. Round your answers to two decimal places. Project M: years Project N: years Calculate discounted payback for each project. Do not round intermediate calculations. Round your answers to two decimal places. Project M: years Project N: years b. Assuming the projects are independent, which one(s) would you recommend? c. If the projects are mutually exclusive, which would you recommend? -Select- d. Notice that the projects have the same cash flow timing pattern. Why is there a conflict between NPV and IRR?