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NPV PROFILES: TIMING DIFFERENCES An oil-drilling company must choose between two mutually exclusive extraction projects, and each...

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Finance

NPV PROFILES: TIMING DIFFERENCES

An oil-drilling company must choose between two mutuallyexclusive extraction projects, and each costs $11.8 million. UnderPlan A, all the oil would be extracted in 1 year, producing a cashflow at t = 1 of $14.16 million. Under Plan B, cash flows would be$2.0967 million per year for 20 years. The firm's WACC is 12%.

  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$10,550,000 should be entered as 10.55. If an amount is zero enter\"0\". Negative value should be indicated by a minus sign.
    Discount RateNPV Plan ANPV Plan B
    0%$ million$ million
    5millionmillion
    10millionmillion
    12millionmillion
    15millionmillion
    17millionmillion
    20millionmillion

    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.
    %

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