Expansion Plans

A company is considering two mutually exclusive expansion plans. Plan A requires a $39 million expenditure on a large-scale integrated plant that would provide expected cash flows of $6.23 million per year for 20 years. Plan B requires a $11 million expenditure to build a somewhat less efficient, more labor-intensive plant with an expected cash flow of $2.47 million per year for 20 years. The firm’s WACC is 10%.

Q. Calculate each project’s NPV. Round your answers to two decimal places. Do not round your intermediate calculations. Enter your answers in millions.

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Q.  Calculate each project’s IRR. Round your answer to two decimal places.