Question

An oil-drilling company must choose between two mutually exclusive extraction projects, and each costs $11.4 million. Under Plan A, all the oil would be extracted in 1 year, producing a cash flow at t = 1 of $13.68 million. Under Plan B, cash flows would be $2.0257 million per year for 20 years. The firm's WACC is 11.3%.

Construct NPV profiles for Plans A and B. Round your answers to two 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 decimal places. 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.

%