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Unformatted text preview: will differ slightly from those done in class but the results are the same as far as the budget goes) Project IRR Value of Project (mil $) Cumulative Value (mil $) Breakpoint (mil $) WACC % A 18.3% $3 $3 11.49% B 17.6% $3 Choose A since A and B are mutually exclusive Atlas Metals Breakpoints and Decision Rules GP 1 17.3% $40 $43 11.49% FL 15.7% $65 $108 $69 12.38% GP2 14.0% $50 $158 12.38% LA 13.5% $32 $190 $160 12.75% TX 12.5% $47 $237 12.75% GP3 11.5% $20 $257 12.75% Note that TX and GP3 have IRRs less than the WACC of 12.75% and therefore should not be accepted as project in the capital budget. Note that A and B are mutually exclusive so we choose the one with the higher IRR. Choose A, GP1, FL, GP2 and LA as part of the Capital Budget since all have IRRs greater than 12.75%. The Capital Budget is $190M....
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- Spring '11