Consider the following projects: Cash Flows ($) Project C0 C1 D –10,300 20,600 E –20,300 35,525...

Consider the following projects:

Cash Flows ($)
Project	C₀	C₁
D	–10,300	20,600
E	–20,300	35,525

Assume that the projects are mutually exclusive and that the opportunity cost of capital is 9%.

a. Calculate the profitability index for each project. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Consider the following projects:

Cash Flows ($)
Project	C₀	C₁
D	–10,300	20,600
E	–20,300	35,525

Assume that the projects are mutually exclusive and that the opportunity cost of capital is 9%.

a. Calculate the profitability index for each project. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Project	Profitability Index
D
E

b-1. Calculate the profitability-index using the incremental cash flows. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Profitability-index

Expert Solution

jeff jeffy answered 3 years ago

Consider the following projects: Cash Flows ($) Project C0 C1 D –11,500 23,000 E –21,500 37,625...

Consider the following projects: Cash Flows ($) Project C0 C1 D –11,500 23,000 E –21,500 37,625 Assume that the projects are mutually exclusive and that the opportunity cost of capital is 10%. a. Calculate the profitability index for each project. Project Profitability Index D E b-1. Calculate the profitability-index using the incremental cash flows. (D Profitability-index b-2. Which project should you choose? Project D Project E

Consider the following two mutually exclusive projects withtheir expected Cash Flows ($)Project C0 C1...

Consider the following two mutually exclusive projects with their expected Cash Flows ($)Project C0 C1 C2 C3A –$100 +$60 +$60 +$60B –$100 ------ ------ +$208.35What is the cross-over rate for these two projects?a. unknown, because the discount rate is unkownb. 28%c. 36%d. 32%e. 15%

Consider the following two mutually exclusive projects: Cash Flows ($) Project C0 C1 C2 C3 A...

Consider the following two mutually exclusive projects: Cash Flows ($) Project C0 C1 C2 C3 A -$100 +$60 +$60 +$60 B -$100 ---- ---- +$208.35 Calculate the NPV of each project for a discount rate of 14%. What is approximately the IRR for each project individually? Use the IRR cross-over method to determine which of the projects you should accept (describe the correct decision rule describing when you pick A versus B based on what discount rate).

Consider the following projects: Cash Flows ($) Project C0 C1 C2 C3 C4 C5 A −2,000...

Consider the following projects: Cash Flows ($) Project C0 C1 C2 C3 C4 C5 A −2,000 2,000 0 0 0 0 B −4,000 2,000 2,000 5,000 2,000 2,000 C −5,000 2,000 1,300 0 2,000 2,000 a. If the opportunity cost of capital is 12%, which project(s) have a positive NPV? Positive NPV project(s) Project A Project B Project C Projects A and B Projects A and C Projects B and C Projects A, B, and C No project b. Calculate...

Consider the following projects: Cash Flows ($) Project C0 C1 C2 C3 C4 C5 A −2,500...

Consider the following projects: Cash Flows ($) Project C0 C1 C2 C3 C4 C5 A −2,500 2,500 0 0 0 0 B −5,000 2,500 2,500 5,500 2,500 2,500 C −6,250 2,500 2,500 0 2,500 2,500 a. If the opportunity cost of capital is 9%, which project(s) have a positive NPV? Positive NPV project(s) Project A Project B Project C Projects A and B Projects A and C Projects B and C Projects A, B, and C No project b. Calculate...

Consider the following projects: Cash Flows ($) Project C0 C1 C2 C3 C4 C5 A −2,800...

Consider the following projects: Cash Flows ($) Project C0 C1 C2 C3 C4 C5 A −2,800 2,800 0 0 0 0 B −5,600 2,800 2,800 5,800 2,800 2,800 C −7,000 2,800 2,500 0 2,800 2,800 If the opportunity cost of capital is 12%, which project(s) have a positive NPV? Positive NPV Projects Calculate the payback period for each project. Project A years Project B years Project C years Which project(s) would a firm using the payback rule accept...

Consider projects A and B: Cash Flows (dollars) Project C0 C1 C2 NPV at 10% A...

Consider projects A and B: Cash Flows (dollars) Project C0 C1 C2 NPV at 10% A −33,000 23,400 23,400 +$7,612 B −53,000 36,000 36,000 +9,479 a. Calculate IRRs for A and B. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

A project has the following cash flows : C0 C1 &nb

A project has the following cash flows : C0 C1 C2 +6,750 +4,500 -18,000 Calculate the NPV of the project for a discount rate of i) 0% ii)33% iii) 50% and iv) 100%. Which discount rate provides the largest NPV? a) 0% b) 33% c) 50% d) 100%

Consider two mutually exclusive projects A and B: Cash Flows (dollars) Project C0 C1 C2 NPV...

Consider two mutually exclusive projects A and B: Cash Flows (dollars) Project C0 C1 C2 NPV at 12% A −31,000 21,800 21,800 +$5,843 B −51,000 34,000 34,000 +6,462 a. Calculate IRRs for A and B. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

1. The following cash flows are given for the Project Z _________________________________________________________ C0 C1&

1. The following cash flows are given for the Project Z _________________________________________________________ C0 C1 C2 C3 C4 C5 -$7000 +$3,000 +$4,000 +$6,000 +$2,500 +$2,000 _________________________________________________________ Calculate the following: (a) NPV (Net Present Value) at 12% discount rate (b) IRR (Internal Rate of Return) (c) The payback period for Project (Z)

Question