1) Considering the four projects that we discussed and last sessions calculations for WACC1, WACC2 and Retained earnings breakpoint, what is the firms optimal capital budget?
Project A has a cost of $750,000 and an IRR of 11.63%
Project B has a cost of $1,200,000 and an IRR of 13.03%
Project C has a cost of $800,000 and an IRR of 12.43%
Project D has a cost of $300,000 and an IRR of 11.61%
2) Given the following information about two mutually exclusive projects, calculate each projects IRR and NPV and provide your acceptance/rejection decision (assuming a WACC of 10%).
Time X Y
0 -1 -100
1 1.80 160
3) Calculate the MIRR for the following project cash flows (assuming a WACC of 12%)
CF0 = -500
CF1 = 300
CF2 = 400
CF3 = -100
CF4 = 50
CF5 = 250
CF6 = -30
