solution

Cummings Products Company is considering two mutually exclusive investments whose expected net cash flows are as follows:

Expected Net Cash Flows
Year Project A Project B
0 -$400 -$650
1 -528 210
2 -219 210
3 -150 210
4 1,100 210
5 820 210
6 990 210
7 -325 210

What is each project’s IRR? Do not round intermediate calculations. Round your answers to two decimal places

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A ? B ?

Calculate the two projects’ NPVs, if each project’s cost of capital was 10%. Do not round intermediate calculations. Round your answers to the nearest cent.

A ? B ?

Calculate the two projects’ NPVs, if each project’s cost of capital was 17%. Do not round intermediate calculations. Round your answers to the nearest cent.

A ? B ?

What is each project’s MIRR at a cost of capital of 10%? (Hint: Consider Period 7 as the end of Project B’s life.) Do not round intermediate calculations. Round your answers to two decimal places.

A ? B ?

Calculate the two projects’ NPVs, if each project’s cost of capital was 17%. Do not round intermediate calculations. Round your answers to the nearest cent.

A ? B ?

What is the crossover rate? Do not round intermediate calculations. Round your answer to two decimal places

 
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