Question
In: Finance
Consider the following cash flows of two mutually exclusive projects for Braisl Rubber Co. Assume the...
Consider the following cash flows of two mutually exclusive projects for Braisl Rubber Co. Assume the discount rate for both projects is 9 Percent.
|
Year |
Dry PrePreg |
Solvent PrePreg |
|
0 |
1,820,000 |
810,000 |
|
1 |
1,112,000 |
435,000 |
|
2 |
924,000 |
720,000 |
|
3 |
762,000 |
414,000 |
a. What is the payback period for both projects?
|
Dry PrePreg |
Years |
|
|
Solvent PrePreg |
Years |
b. What is the NPV for both projects?
|
Dry PrePreg |
|
|
Solvent PrePreg |
c. What is the IRR for both projects?
|
Dry PrePreg |
% |
|
|
Solvent PrePreg |
% |
d. Calculate the incremental IRR for the cash flows?
|
Incremental IRR |
% |
Solutions
Expert Solution
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jeff jeffy answered 3 years agoRelated Solutions
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Year
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0
–$
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Solvent Prepreg
0
–$
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Year
Dry Prepreg
Solvent Prepreg
0
–$
1,810,000
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1,111,000
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2
922,000
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Solvent Prepeg
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Consider the following cash flows of two mutually exclusive projects for Spartan Rubber Company. Assume the...
Consider the following cash flows of two mutually exclusive
projects for Spartan Rubber Company. Assume the discount rate for
both projects is 8 percent.
Year
Dry Prepreg
Solvent Prepreg
0
–$
1,810,000
–$
805,000
1
1,111,000
430,000
2
922,000
710,000
3
761,000
412,000
a. What is the payback period for each project?
(Do not round intermediate calculations and round your
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Payback period
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1.92 1.92
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Solvent Prepreg
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YearDry PrepregSolvent Prepreg
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1 1,115,000 450,000
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3 765,000 420,000
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e.g., 32.16.)
b.
What is the NPV for both projects? (Do not round intermediate
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Year
Dry Prepreg
Solvent Prepreg
0
–$
1,830,000
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1
1,113,000
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2
926,000
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Year
Dry Prepreg
Solvent Prepreg
0
–$
1,870,000
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1
1,117,000
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2
934,000
770,000
3
767,000
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a.
What is the payback period for both projects? (Do not
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b.
What is the NPV for both projects? (Do not round
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Year
Deepwater
Fishing
New Submarine Ride
0
-$1,700,000
-$750,000
1
1,100,000
375,000
2
900,000
600,000
3
750,000
390,000
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Comparing Investment Criteria. Consider the following cash flows of two mutually exclusive projects for Spartan Rubber...
Comparing Investment Criteria. Consider the following cash flows
of two mutually exclusive projects for Spartan Rubber
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a. Based on the payback period, which project should be
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c. Based on the IRR, which project should be
taken?
d. Based on the above analysis, is incremental IRR
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analysis.
Year
Dry Prepreg
Solvent Prepreg
0
(1,800,000)
(925,000)
1
690,000...
Consider the following two mutually exclusive projects and their Cash Flows ($)
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C0 C1 C2
C3K
–$100
+$45 +$45 +$60 W
–$150
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