Question
In: Finance
Nast Inc. is considering Projects S and L, whose cash flows are shown below. These projects...
Nast Inc. is considering Projects S and L, whose cash flows are
shown below. These projects are mutually exclusive, equally risky,
and not repeatable. If the decision is made by choosing the project
with the higher MIRR rather than the one with the higher NPV, how
much value will be forgone? Note that under some conditions
choosing projects on the basis of the MIRR will cause $0.00 value
to be lost.
| WACC: | 10.75% | ||||
| 0 | 1 | 2 | 3 | 4 | |
| CFS | -$1,100 | $375 | $375 | $375 | $375 |
| CFL | -$2,200 | $725 | $725 | $725 | $725 |
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Solutions
jeff jeffy answered 2 years agoRelated Solutions
Nast Inc. is considering Projects S and L, whose cash flows are shown below. These projects...
Nast Inc. is considering Projects S and L, whose cash flows are
shown below. These projects are mutually exclusive, equally risky,
and not repeatable. If the decision is made by choosing the project
with the higher MIRR rather than the one with the higher NPV, how
much value will be forgone? Note that under some conditions
choosing projects on the basis of the MIRR will cause $0.00 value
to be lost. WACC: 10.75% 0 1 2 3 4 CFS -$1,100...
Nast Inc. is considering Projects S and L, whose cash flows are shown below. These projects...
Nast Inc. is considering Projects S and L, whose cash flows are
shown below. These projects are mutually exclusive, equally risky,
and not repeatable. If the decision is made by choosing the project
with the higher MIRR rather than the one with the higher NPV, how
much value will be forgone? Note that under some conditions
choosing projects on the basis of the MIRR will cause $0.00 value
to be lost.
WACC:
10.75%
0
1
2
3
4
CFS
-$1,100...
Yonan Inc. is considering Projects S and L, whose cash flows are shown below. These projects...
Yonan Inc. is considering Projects S and L, whose cash flows are
shown below. These projects are mutually
exclusive, equally risky, and not repeatable. If the decision is
made by choosing the project with the shorter
payback, some value may be forgone. How much value will be lost in
this instance? Note that under some
conditions choosing projects on the basis of the shorter payback
will not cause value to be lost
WACC 11.75%
0
1
2
3
4
CFs...
Poston Inc. is considering Projects S and L, whose cash flows are shown below. These projects...
Poston Inc. is considering Projects S and L, whose cash
flows are shown below. These projects are mutually exclusive (must
choose one or the other), equally risky, and not repeatable. If the
decision is made by choosing the project with the higher IRR, how
much value will be forgone? You must calculate the IRR and NPV for
both projects select the project with the higher IRR and then
calculate how much less the NPV is by selecting the project with...
Sexton Inc. is considering Projects S and L, whose cash flows are shown below. These projects...
Sexton Inc. is considering Projects S and L, whose cash flows
are shown below. These projects are mutually exclusive, equally
risky, and not repeatable. If the decision is made by choosing the
project with the higher IRR, how much value will be forgone? Note
that under certain conditions choosing projects on the basis of the
IRR will not cause any value to be lost because the one with the
higher IRR will also have the higher NPV, so no value...
Sexton Inc. is considering Projects S and L, whose cash flows are shown below. These projects...
Sexton Inc. is considering Projects S and L, whose cash flows
are shown below. These projects are mutually exclusive, equally
risky, and not repeatable. If the decision is made by choosing the
project with the higher IRR, how much value will be forgone? Note
that under certain conditions choosing projects on the basis of the
IRR will not cause any value to be lost because the one with the
higher IRR will also have the higher NPV, so no value...
Charlestown Inc. is considering Projects S and L, whose cash flows are shown below. These projects...
Charlestown Inc. is considering Projects S and L, whose cash
flows are shown below. These projects are mutually exclusive,
equally risky, and not repeatable.
WACC:
9.00%
0
1
2
3
4
CFS
-$2,000
$950
$950
$950
$950
CFL
-$9,000
$3,200
$3,200
$3,200
$3,200
If the decision is made by choosing the project with the higher
IRR, how much value will be forgone?
What is the payback period for Project S?
What is the discounted payback period for Project L?
What...
- Langton Inc. is considering Projects S and L, whose cash flows are shown below. These...
- Langton Inc. is considering Projects S and L, whose cash flows
are shown below. These projects are mutually exclusive, equally
risky, and not repeatable. The CEO believes the IRR is the best
selection criterion, while the CFO advocates the NPV. If the
decision is made by choosing the project with the higher IRR rather
than the one with the higher NPV, how much, if any, value will be
forgone? In other words, what's the NPV of the chosen project...
A firm is considering Projects S and L, whose cash flows are shown below. These projects...
A firm is considering Projects S and L, whose cash flows are
shown below. These projects are mutually exclusive, equally risky,
and not repeatable. The CEO wants to use the IRR criterion, while
the CFO favors the NPV method. You were hired to advise the firm on
the best procedure. If the wrong decision criterion is used, how
much potential value would the firm lose? WACC: 6.75% 0 1 2 3 4 CFS
-$1,025 $380 $380 $380 $380 CFL -$2,150...
A firm is considering Projects S and L, whose cash flows are shown below. These projects...
A firm is considering Projects S and L, whose cash flows are
shown below. These projects are mutually exclusive, equally risky,
and not repeatable. The CEO wants to use the IRR criterion, while
the CFO favors the NPV method. You were hired to advise the firm on
the best procedure. If the wrong decision criterion is used, how
much potential value would the firm lose?
WACC:
7.75%
0
1
2
3
4
CF S
-$1,025
$380
$380
$380
$380
CF...
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