Question
In: Finance
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 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
project 2project 1neither project |
Solutions
jeff jeffy answered 2 years agoRelated 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
-$1,291,014
-$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...
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...
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...
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