Project Q Project R Investment &n

Project Q Project R

Investment 100,000 500,000

IRR 15.5% 12.3%

NPV $5500.00 $6750.00

Profitability Index 1.055 1.014

If the projects are mutually exclusive, which one should be selected? Why?

Expert Solution

Mutually exclusive projects are combination of projects from which only one project can be selected and all other projects are ignored.

On the basis of IRR the project with higher irr should b selected. On the basis of NPV the project with positive NPV should be selected and on the basis of PI the project with higher PI above 1 should be accepted.

Now in the given question Project Q has higher IRR and PI but project R has higher NPV. Under the mutually exclusive projects when there is a conflict between IRR AND NPV project with high NPV should b choosen because irr assumes that all cash flows are reinvested at IRR and multiple IRR may arise for uneven cash flows.

Same is the case for PI when there are mutually exclusive projects project NPV is considered as more reliable than PI.

On the conclusion NPV is considered as more reliable than both PI and IRR therefore even though project R has low IRR and PI since it has high NPV it should be selected.

jeff jeffy answered 7 months ago

Show that if P;Q are projections such that R(P) = R(Q) and N(P) = N(Q), then...

Show that if P;Q are projections such that R(P) = R(Q) and N(P) = N(Q), then P = Q.

Given the following subsets of R: A = R\Q = {x ∈ R|x not in Q}...

Given the following subsets of R: A = R\Q = {x ∈ R|x not in Q} B = {1, 2, 3, 4} C = (0, 1] D = (0, 1] ∪ [2, 3) ∪ (4, 5] ∪ [6, 7] ∪ {8} (a) Find the set of limit points for each subset when considered as subsets of RU (usual topology on R). (b) Find the set of limit points for each subset when considered as subsets of RRR (right-ray topology on...

Let p and q be two linearly independent vectors in R^n such that ||p||_2=1, ||q||_2=1 ....

Let p and q be two linearly independent vectors in R^n such that ||p||_2=1, ||q||_2=1 . Let A=pq^T+qp^T. determine the kernel, nullspace,rank and eigenvalue decomposition of A in terms of p and q.

If R is a P.I.D. then an R-module Q is injective if and only if rQ=Q...

If R is a P.I.D. then an R-module Q is injective if and only if rQ=Q for every nonzero r in R.

Determine cash flows, r, and n You are considering an investment that has a payoff of...

Determine cash flows, r, and n You are considering an investment that has a payoff of $4,707.79 in 2 years. If the interest rate is 11.68%, and interest is compounded annually, then what is this investment worth to you today?

Prove p → (q ∨ r), q → s, r → s ⊢ p → s

Projects T and Q are mutually-exclusive investment alternatives, Each project requires a net investment of $20,000,...

Projects T and Q are mutually-exclusive investment alternatives, Each project requires a net investment of $20,000, followed by a series of positive net cash flows. Both projects have a useful life equal to 10 years. Project T has an NPV of $36,000 at a 0% discount rate, while project Q has an NPV of $30,000 at 0%. Furthermore, at a discount rate of 15 percent, the two projects have identical positive NPVs. Given this, which of the following statements is...

give a constructive proof of fn = Q^n + P^n/ Q - P , where Q...

give a constructive proof of fn = Q^n + P^n/ Q - P , where Q is the positive root and P is negative root of x^2 - x - 1= 0 fn is nth term of fibonacci sequence, f1 = 1 f2, f3 = f2 +f1, ... fn= fn_1 +fn_2 , n>2

Prove 1. For each u ∈ R n there is a v ∈ R n such...

Prove 1. For each u ∈ R n there is a v ∈ R n such that u + v= 0 2. For all u, v ∈ R n and a ∈ R, a(u + v) = au + av 3. For all u ∈ R n and a, b ∈ R, (a + b)u = au + bu 4. For all u ∈ R n , 1u=u

Q no.3 &n

Q no.3 (5) Impression Management Case Study Recently you have been recruited at a well-known company. Your first job is to impress the boss with best impression management technique. You find out quickly your boss is “bossy”, who likes his authority and dislike when he is being challenged by employees. He expects his employees to given in best quality work on time and stay honest to their work roles and duties. One day during your first office meeting...

Question