Question
In: Finance
A toy manufacturer is considering an acquisition plan. The acquisition should be through either project A...
A toy manufacturer is considering an acquisition plan. The acquisition should be through either project A or B or C as they are mutually exclusive projects. Information about the initial cost and cash flows is as follows:
| time | project A | project B | project C |
| 0 | ($50,000) | ($180,000) | ($420,000) |
| 1 | $15,000 | $90,000 | $220,000 |
| 2 | $11,000 | $7,000 | $160,000 |
| 3 | $26,000 | $6,000 | $95,000 |
| 4 | $14,000 | $115,000 | $35,000 |
If the discount rate is 9%. Answer the following: a. Find the NPV for each project. b. Find the IRR for each project. c. If the company’s decision is based on the outcomes of NPV ONLY, which project should be applied? d. If the company’s decision is based on the outcomes of IRR ONLY, which project should be applied?
Solutions
jeff jeffy answered 2 years agoRelated Solutions
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PROJECT A
PROJECT B
Initial outlay
-110,000
-110,000
Inflow year 1
10,000
40,000
Inflow year 2
30,000
40,000
Inflow year 3
40,000
40,000
Inflow year 4
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Inflow year 5
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nothing
(Round to three decimal places.)
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