Question
In: Finance
Suppose that you have the two projects as below: Project B. Project A Year 200. 1,000....
Suppose that you have the two projects as below:
Project B. Project A Year
200. 1,000. 1
600. 800. 2
800. 600. 3
1,200. 200. 4
Each project has a cost of $ 2,000 and the total cost of
capital is 10%.
Determine which project should be accepted ?Using Net present
value (NPV)
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Suppose that you have two mutually exclusive projects. A and B. Project A has cash flows...
Suppose that you have two mutually exclusive projects. A and B.
Project A has cash flows of CF0, CF1, CF2, CF3, CF4, CF5. (Years
0-5). Project B has cash flow of CF0, CF1, CF2, CF3. The discount
rate for the projects is 10.5%.
a) Analyze these two projects and recommend a project to
accept.
b) Carefully outline all your analysis and reasoning and discuss
your methodologies for arriving at your solution in detail.
Project A
Project B
CF0
(4,650.00)
(8,300.00)...
Suppose you are given the following two projects A and B with the cash flows below,...
Suppose you are given the following two projects A and B with
the cash flows below, if the cost of capital is 10%, what is the
Profitability Index (PI) of projects A and B?
Year
Project A
Project B
0
-5000
-6000
1
1500
1500
2
2000
2500
3
3000
4000
4
3500
4000
You have two potential investment projects, Project A and Project B. You can take one, but...
You have two potential investment projects, Project A and
Project B. You can take one, but not both. The annual cash flows
for the two projects are:
Year
0
1
2
3
Project A Cash Flow
-$50,000
$45,000
$5,000
$5,000
Project B Cash Flow
-$50,000
$5,000
$5,000
$50,000
a. Compute the IRR for each project. b) Compute the NPV for each
project if the appropriate discount rate is
5%. Which project would you take, and why?
c) Compute the NPV for each...
The following are the cash flows of two projects: Year Project A Project B...
The following are the cash flows of two projects:
Year Project A Project B
0 -250 -250
1 130 150
2 130 150
3 130 150
4 130
If the opportunity cost is 10%, what is the profitability index
for each project?
Project Profitability Index
A
B
You are considering the following two mutually exclusive projects. YEAR PROJECT (A) PROJECT (B) 0&
You are considering the following two mutually exclusive
projects.
YEAR
PROJECT
(A) PROJECT
(B)
0
-$35,000
-$35,000
1
22,000
13,000
2
20,000
21,000
3
13,000
22,000
What is the internal rate of return of PROJECT A?
You are considering the following two mutually exclusive projects. YEAR PROJECT (A) PROJECT (B) 0&
You are considering the following two mutually exclusive
projects.
YEAR
PROJECT
(A) PROJECT
(B)
0
-$35,000
-$35,000
1
22,000
13,000
2
20,000
21,000
3
13,000
22,000
What is the crossover point?
You are considering the following two mutually exclusive projects. Project A Project B Year 0 -$10,000...
You are considering the following two mutually exclusive
projects. Project A Project B Year 0 -$10,000 -$20,000 Year 1 $
3,000 $ 5,000 Year 2 $ 8,000 $ 7,000 Year 3 $ 4,000 $12,000 Year 4
$ 2,000 $10,000 The required return on each project is 12 percent.
Which project should you accept and what is the best reason for
that decision? a. Project B; because it has the higher net present
value b. Project A; because it pays back...
The following are the cash flows of two projects: Year Project A Project B 0 ?$...
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.)
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