An oil-drilling company must choose between two mutuallyexclusive extraction projects, and each costs $12.8 million. UnderPlan A, all the oil would be extracted in 1 year, producing a cashflow at t = 1 of $15.36 million. Under Plan B, cash flows would be$2.2744 million per year for 20 years. The firm's WACC is12.1%.

1. Construct NPV profiles for Plans A and B. Round your answers totwo decimal places. Do not round your intermediate calculations.Enter your answers in millions. For example, an answer of$10,550,000 should be entered as 10.55. If an amount is zero enter"0". Negative value should be indicated by a minus sign.

   Discount Rate	NPV Plan A	NPV Plan B
   0%	$ ____million	$ ____ million
   5	_____million	_____million
   10	_____million	_____million
   12	_____ million	_____million
   15	____ million	_____ million
   17	____million	_____million
   20	____million	_____million

   Identify each project's IRR. Round your answers to two decimalplaces. Do not round your intermediate calculations.

   Project A ____ %

   Project B ____%

   Find the crossover rate. Round your answer to two decimal places.Do not round your intermediate calculations.
   ____%
2. 
   
3. Is it logical to assume that the firm would take on allavailable independent, average-risk projects with returns greaterthan 12.1%?      [YES or NO]

If all available projects with returns greater than 12.1% have beenundertaken, does this mean that cash flows from past investmentshave an opportunity cost of only 12.1%, because all the company cando with these cash flows is to replace money that has a cost of12.1%?              [YES OR NO]


Does this imply that the WACC is the correct reinvestment rateassumption for a project's cashflows?                         [YES or NO]