a) A company is considering two mutually exclusive expansion plans. Plan A requires a $30...
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a) A company is considering two mutually exclusive expansion plans. Plan A requires a $30 million expenditure on a large-scale, integrated plant that would provide expected cash flows of $8.9 million per year for 5 years. Plan B requires a $4 million expenditure to build a somewhat less efficient, more labor-intensive plant with an expected cash flow of $1.3 million per year for 5 years. The firm's WACC is 12 percent. Calculate each project's NPV
Group of answer choices
NPVA = $2.08 million NPVB = $0.47 million
NPVA = $3.07 million NPVB = $0.47 million
NPVA = $2.08 million NPVB = $0.69 million
NPVA = $3.07 million NPVB = $0.69 million
b)Project S costs $12,000, and its expected cash flows would be $4,050 per year for 5 years. Mutually exclusive Project L costs $40,000, and its expected cash flows would be $12,500 per year for 5 years. If both projects have a WACC of 14 percent, which project would you recommend?
Group of answer choices
Project L
Project S
Both
Neither
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