Question
In: Finance
The following are the cash flows of two independent projects:Year Project A Project B 0...
The following are the cash flows of two independent projects: Year Project A Project B 0 $ (250 ) $ (250 ) 1 130 150 2 130 150 3 130 150 4 130 a. If the opportunity cost of capital is 10%, calculate the NPV for both projects. (Do not round intermediate calculations. Round your answers to 2 decimal places.) b. Which of these projects is worth pursuing? Project A Project B Both Neither
Solutions
Expert Solution
| Ans 1 | |||||||
| Computation of NPV | |||||||
| Cash flow | Present value | ||||||
| Year | Project A | Project B | PVIF @ 10% | Project A | Project B | ||
| 0 | -250 | -250 | 1.0000 | $(250.00) | $(250.00) | ||
| 1 | 130 | 150 | 0.9091 | $ 118.18 | $ 136.36 | ||
| 2 | 130 | 150 | 0.8264 | $ 107.44 | $ 123.97 | ||
| 3 | 130 | 150 | 0.7513 | $ 97.67 | $ 112.70 | ||
| 4 | 130 | 0.6830 | $ 88.79 | $ - | |||
| NPV | $ 162.08 | $ 123.03 | |||||
| NPV A | $ 162.08 | ||||||
| NPV B | $ 123.03 | ||||||
| Ans 2 | Since both projects has positive NPV therefore, both should be accepted. | ||||||
| Ans = | Both |
jeff jeffy answered 2 years agoRelated Solutions
The following are the cash flows of two projects: Year Project A Project B 0 ?$...
The following are the
cash flows of two projects:
Year
Project A
Project B
0
?$
380
?$
380
1
210
280
2
210
280
3
210
280
4
210
If the opportunity
cost of capital is 11%, what is the profitability index for each
project? (Do not round intermediate calculations. Round
your answers to 4 decimal places.)
The following are the cash flows of two projects: Year Project A Project B 0 ?$...
The following are the cash flows of two projects:
Year Project A Project B
0 ?$ 280 ?$ 280
1 160 180
2 160 180
3 160 180
4 160
If the opportunity cost of capital is 10%, what is the
profitability index for each project? (Do not round intermediate
calculations. Round your answers to 4 decimal places.) Project A
Profitability Index Project B
The following are the cash flows of two projects: Year Project A Project B 0 −$...
The following are the cash flows of two projects: Year Project A
Project B 0 −$ 290 −$ 290 1 170 190 2 170 190 3 170 190 4 170 If
the opportunity cost of capital is 11%, what is the profitability
index for each project? (Do not round intermediate calculations.
Round your answers to 4 decimal places.)
The following are the cash flows of two projects: Year Project A Project B 0 $...
The following are the cash flows of two projects:
Year
Project A
Project B
0
$
(330)
$
(330)
1
160
230
2
160
230
3
160
230
4
160
If the opportunity cost of capital is 12%, what is the
profitability index for each project? (Do not round
intermediate calculations. Round your answers to 4 decimal
places.)
Project Profitability Index:
A
B
The following are the cash flows of two projects: Year Project A Project B 0 ?$...
The following are the cash flows of two projects: Year Project A
Project B 0 ?$ 220 ?$ 220 1 100 120 2 100 120 3 100 120 4 100 If
the opportunity cost of capital is 10%, what is the profitability
index for each project? (Do not round intermediate calculations.
Round your answers to 4 decimal places.)
The following are the cash flows of two projects: Year Project A Project B 0 $...
The following are the
cash flows of two projects:
Year
Project A
Project B
0
$
(260
)
$
(260
)
1
140
160
2
140
160
3
140
160
4
140
a. Calculate the NPV for both projects if the
opportunity cost of capital is 16%. (Do not round
intermediate calculations. Round your answers to 2 decimal
places.)
Project A
Project B
b.
Suppose that you can choose only one of these projects. Which would
you choose?
Project A...
The following are the cash flows of two projects: Year Project A Project B 0 $...
The following are the cash flows of two projects:
Year
Project A
Project B
0
$
(330
)
$
(330
)
1
160
230
2
160
230
3
160
230
4
160
a. If the opportunity cost of capital is 12%,
calculate the NPV for both projects. (Do
not round intermediate calculations. Round your answers to 2
decimal places.)
b. Which of these projects is worth
pursuing?
****NOTE**** You are finding the NPV, NOT the Profitability
index!
The following are the cash flows of two projects: Year Project A Project B 0 $(340)...
The following are the cash flows of two projects:
Year
Project A
Project B
0
$(340)
$(340)
1
170
240
2
170
240
3
170
240
4
170
A.) Calculate the NPV for both projects if the opportunity costs
of capital is 15%. *(2 decimal places, do not round intermediate
calculations)
B.) Suppose you can choose one one of these projects, which
would you choose?
The following are the cash flows of two projects: Year Project A Project B 0 −$330...
The following are the cash flows of two projects:
Year
Project A
Project B
0
−$330
−$330
1
160
230
2
160
230
3
160
230
4
160
a.
Calculate the NPV for both projects if the opportunity cost of
capital is 17%. (Do not round intermediate calculations.
Round your answers to 2 decimal places.)
Project
NPV
A
$
B
b.
Suppose that you can choose only one of...
The following are the cash flows of two projects: Year Project A Project B 0 -290...
The following are the cash flows of two projects:
Year
Project A
Project B
0
-290
-290
1
170
190
2
170
190
3
170
190
4
170
If the opportunity cost of capital is 11%, what is the
profitability index for each project? (Do not round
intermediate calculations. Round your answers to 4 decimal
places.)
Project
Profitability Index
a
b
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Which subnet (network address) does host 25.17.102.51 255.255.248.0 belong to?
- Joe Dokes retired today with $1,000,000 in his retirement nest egg. If he followed a cash...
- how is biopsychosocial compatiable model in the future.
- Give at least 5 nursing interventions (with rationale) of nursing diagnosis: Health-seeking behaviors related to patient’s...
- The Wall Street Wizard Co. sold a stock market investing plan through the mail that made...
- Rotating bits in C This rotates bits to the left which means the bits that were...
- Implement a method that meets the following requirements: (a) Takes as parameter 1) an int array...
ADVERTISEMENT