An oil-drilling company must choose between two mutually exclusive extraction projects, and each requires an initial...

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Finance

An oil-drilling company must choose between two mutuallyexclusive extraction projects, and each requires an initial outlayat t = 0 of $11 million. Under Plan A, all the oil would beextracted in 1 year, producing a cash flow at t = 1 of $13.2million. Under Plan B, cash flows would be $1.9546 million per yearfor 20 years. The firm's WACC is 11.7%.
Construct NPV profiles for Plans A and B. Enter your answers inmillions. For example, an answer of $10,550,000 should be enteredas 10.55. If an amount is zero, enter "0". Negative values, if any,should be indicated by a minus sign. Do not round intermediatecalculations. Round your answers to two decimal places.
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. Do not round intermediatecalculations. Round your answers to two decimal places.
Project A:   %
Project B:   %
Find the crossover rate. Do not round intermediate calculations.Round your answer to two decimal places.
  %

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Transcribed Image Text

An oil-drilling company must choose between two mutuallyexclusive extraction projects, and each requires an initial outlayat t = 0 of $11 million. Under Plan A, all the oil would beextracted in 1 year, producing a cash flow at t = 1 of $13.2million. Under Plan B, cash flows would be $1.9546 million per yearfor 20 years. The firm's WACC is 11.7%.Construct NPV profiles for Plans A and B. Enter your answers inmillions. For example, an answer of $10,550,000 should be enteredas 10.55. If an amount is zero, enter "0". Negative values, if any,should be indicated by a minus sign. Do not round intermediatecalculations. Round your answers to two decimal places.Discount RateNPV Plan ANPV Plan B0%$ million $ million 5 million million10 million million12 million million15 million million17 million million20 million millionIdentify each project's IRR. Do not round intermediatecalculations. Round your answers to two decimal places.Project A: %Project B: %Find the crossover rate. Do not round intermediate calculations.Round your answer to two decimal places. %

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