Question

In: Finance

Crane Corp. management is evaluating two mutually exclusive projects. The cost of capital is 15 percent....

Crane Corp. management is evaluating two mutually exclusive projects. The cost of capital is 15 percent. Costs and cash flows for each project are given in the following table.

Year Project 1 Project 2
0 -$1,291,014 -$1,324,281
1 269,000 385,000
2 346,000 385,000
3 407,000 385,000
4 519,000 385,000
5 799,000 385,000

Calculate NPV and IRR of two projects. (Enter negative amounts using negative sign, e.g. -45.25. Do not round discount factors. Round other intermediate calculations and final answer to 0 decimal places, e.g. 1,525. Round IRR answers to 2 decimal places, e.g. 15.25 or 12.25%.)

NPV of project 1 is $
NPV of project 2 is $
IRR of project 1 is %
IRR of project 2 is %


Which project should be accepted?

Crane Corp. should accept

a. project

b. 1 neither project

c. project 2

Solutions

Expert Solution


Related Solutions

Crane Corp. management is evaluating two mutually exclusive projects. The cost of capital is 15 percent....
Crane Corp. management is evaluating two mutually exclusive projects. The cost of capital is 15 percent. Costs and cash flows for each project are given in the following table. Year Project 1 Project 2 0 -$1,266,016 -$1,209,606 1 263,000 345,000 2 358,000 345,000 3 416,000 345,000 4 547,000 345,000 5 721,000 345,000 Calculate NPV and IRR of two projects. (Enter negative amounts using negative sign, e.g. -45.25. Do not round discount factors. Round other intermediate calculations and final answer to...
Problem 10.35 Crane Corp. management is evaluating two mutually exclusive projects. The cost of capital is...
Problem 10.35 Crane Corp. management is evaluating two mutually exclusive projects. The cost of capital is 15 percent. Costs and cash flows for each project are given in the following table. Year Project 1 Project 2 0 -$1,308,961 -$1,198,212 1 257,000 344,000 2 363,000 344,000 3 425,000 344,000 4 520,000 344,000 5 761,000 344,000 Calculate NPV and IRR of two projects. (Enter negative amounts using negative sign, e.g. -45.25. Do not round discount factors. Round other intermediate calculations and final...
As the director of capital budgeting for Bissett Corporation, you are evaluating two mutually exclusive projects...
As the director of capital budgeting for Bissett Corporation, you are evaluating two mutually exclusive projects (you can only choose one) with the following cash flows. The discount rate is 15%. Year Project X Project Y 0 - 100,000 - 100,000 1 50,000 10,000 2 40,000 30,000 3 10,000 40,000 4 10,000 30,000 Which project would you choose? Project X since it has higher IRR Project Y since it has higher NPV Project X since it has higher NPV Neither...
As the director of capital budgeting for EFG Corporation, you are evaluating two mutually exclusive projects...
As the director of capital budgeting for EFG Corporation, you are evaluating two mutually exclusive projects with the following net cash flows: Project E Project F Year Cash Flow Cash Flow 0 -$100,000 -$100,000 1 50,000 10,000 2 40,000 30,000 3 30,000 40,000 4 10,000 60,000 If EFG’s cost of capital is 15 percent, What is the NPV and IRR of the better project, respectively??
As the director of capital budgeting for EFG Corporation, you are evaluating two mutually exclusive projects...
As the director of capital budgeting for EFG Corporation, you are evaluating two mutually exclusive projects with the following net cash flows:                                Project E Project F                   Year     Cash Flow     Cash Flow                    0       -$100,000        -$100,000                    1          50,000            10,000                    2          40,000            30,000                    3          30,000            40,000                    4          10,000            60,000 If EFG’s cost of capital is 15 percent, What is the NPV and IRR of the better project, respectively??
As the director of capital budgeting for EFG Corporation, you are evaluating two mutually exclusive projects...
As the director of capital budgeting for EFG Corporation, you are evaluating two mutually exclusive projects with the following net cash flows:                                Project E Project F                   Year     Cash Flow     Cash Flow                    0       -$100,000        -$100,000                    1          50,000            10,000                    2          40,000            30,000                    3          30,000            40,000                    4          10,000            60,000 If EFG’s cost of capital is 15 percent, What is the NPV and IRR of the better project, respectively??
Diamond City is considering two mutually exclusive investment projects. The cost of capital for these projects...
Diamond City is considering two mutually exclusive investment projects. The cost of capital for these projects is r. The projects’ expected net cash flows are as follows: Year Project A Project B 0 -42,000 -42,000 1 24,000 16,000 2 20,000 18,000 3 16,000 22,000 4 12,000 26,000 a. If r = 10%, which project should be selected under the NPV method? b. If r = 20%, which project should be selected under the NPV method? c. Calculate each project’s PI...
Diamond City is considering two mutually exclusive investment projects. The cost of capital for these projects...
Diamond City is considering two mutually exclusive investment projects. The cost of capital for these projects is r. The projects’ expected net cash flows are as follows: Year Project A Project B 0 -42,000 -42,000 1 24,000 16,000 2 20,000 18,000 3 16,000 22,000 4 12,000 26,000 a. Calculate each project’s payback (PB) period if r = 10% (up to 2 decimal places). Which project should be accepted? b. Calculate each project’s discounted payback (DPB) period if r = 10%...
​(Mutually exclusive projects and NPV​) You have been assigned the task of evaluating two mutually exclusive...
​(Mutually exclusive projects and NPV​) You have been assigned the task of evaluating two mutually exclusive projects with the following projected cash​ flows: If the appropriate discount rate on these projects is 11 ​percent, which would be chosen and​ why? What is the NPV of project​ A? ​$ nothing ​ (Round to the nearest​ cent.) What is the NPV of project​ B? ​$ ​(Round to the nearest​ cent.) Which project would be chosen and​ why? ​(Select the best choice​.) A....
​(Mutually exclusive projects and NPV​) You have been assigned the task of evaluating two mutually exclusive...
​(Mutually exclusive projects and NPV​) You have been assigned the task of evaluating two mutually exclusive projects with the following projected cash​ flows: YEAR PROJECT A CASH FLOW PROJECT B CASH FLOW    0 −​$110,000 −​$110,000    1        30,000               0    2        30,000               0    3        30,000               0    4        30,000               0    5        30,000      220,000 ​(Click on the icon located on the​ top-right corner of the data table above in order to copy its contents into a spreadsheet.​) If the appropriate discount rate on these...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT