Question
In: Finance
The following table contains projected cash flows for two mutually exclusive projects. Use the information for...
| The following table contains projected cash flows for two mutually exclusive projects. Use the information for questions Part A-Part B. | ||||
| Year | Project A | Project B | ||
| 0 | -55000 | -55000 | ||
| 1 | 10000 | 7500 | ||
| 2 | 9000 | 7500 | ||
| 3 | 8000 | 7500 | ||
| 4 | 8000 | 7500 | ||
| 5 | 7500 | 8000 | ||
| 6 | 7500 | 9000 | ||
| 7 | 7500 | 9000 | ||
| 8 | 7500 | 10000 | ||
| Part A. Calculate NPVs for both project and for various interest rates. | ||||
| Annual Interest Rates | NPVA | NPVB | Which Project is preferred | |
| 4.22% | ||||
| 3.59% | ||||
| 2.51% | ||||
| Part B. Calculate IRRs for both project. | ||||
| IRR(A) | IRR(B) | Which project is preferred if the required rate is 5% | ||
Solutions
jeff jeffy answered 2 years agoRelated Solutions
Harris Corporation is considering the following two mutually exclusive projects with their projected cash flows: &nb
Harris Corporation is considering the following two mutually
exclusive projects with their projected cash flows:
Year Project
A Project
B
0
($10,000)
($10,000)
1
4,500
0
2
4,500
0
3
4,500
15,000
If the required return on these projects is 10 percent, which
would be chosen and why?
Group of answer choices
Project A because of higher IRR
Project B because of higher NPV
Project B because of higher IRR
Project...
Interstate Appliance Inc. is considering the following two mutually exclusive projects. Projected cash flows for these...
Interstate Appliance Inc. is considering the following two
mutually exclusive projects. Projected cash flows for these
ventures are as follows:
Plan A
IO
CF1
CF2
CF3
CF4
CF5
3,600,000
0
0
0
0
7,000,000
Plan
B
IO
CF1
CF2
CF3
CF4
CF5
3,500,000
1,000,000
0
2,000,000
2,000,000
1,000,000
If Interstate
Appliance has a 12% cost of capital, what decision should be made
regarding the projects above?
a. Accept plan A.
b. Accept plan B.
c. Reject both plans A and...
. Robin Hood Industries is considering two mutually exclusive projects with the following projected cash flows:...
. Robin Hood Industries is considering two mutually exclusive
projects with the following projected cash flows:
Project A
Project B
Initial Investment
-R635 000,00
-R1 300 000,00
Annual Cash flows
Year 1
R120 000,00
R344 000,00
Year 2
R200 000,00
R300 000,00
Year 3
R90 000,00
R200 000,00
Year 4
R200 000,00
R200 000,00
Year 5
R120 000,00
R200 000,00
Year 6
R180 000,00
R300 000,00
Year 7
R180 000,00
R400 000,00
Year 8
R90 000,00
R550 000,00
Based on...
Two mutually exclusive projects are being considered which have the following projected cash flows: &nbs
Two mutually exclusive projects are being considered which have
the following projected cash flows:
Year
Project
A
Project B
0
($50,000)
($50,000)
1
$15,625
$ 0
2
$16,000
$ 0
3
$15,000
$ 0
4
$16,000
$ 0
5
$15,500
$99,500
a. Calculate the NPV for each of these projects using a 10% rate
of return. Also, indicate which project should be chosen based on
the NPV...
Robin Hood Industries is considering two mutually exclusive projects with the following projected cash flows: Project...
Robin Hood Industries is considering two mutually exclusive
projects with the following projected cash flows:
Project A
Project B
Initial Investment
-R635 000,00
-R1 300 000,00
Annual Cash flows
Year 1
R120 000,00
R344 000,00
Year 2
R200 000,00
R300 000,00
Year 3
R90 000,00
R200 000,00
Year 4
R200 000,00
R200 000,00
Year 5
R120 000,00
R200 000,00
Year 6
R180 000,00
R300 000,00
Year 7
R180 000,00
R400 000,00
Year 8
R90 000,00
R550 000,00
Based on the...
Consider the following two mutually exclusive projects and their Cash Flows ($)
Consider the following two mutually exclusive projects and their
Cash Flows ($)Project
C0 C1 C2
C3K
–$100
+$45 +$45 +$60 W
–$150
+$45 +$45 +$125Which statement is correct based on the above information about
Projects K and W?a. If the discount rate is 7.5%, accept project W because the
cross-over rate is 9%b. Accept project K, because at a 9% discount rate K and W have
the same net present value.c. If the discount rate is 9.5%, reject project K, because the...
Two mutually exclusive projects have the following forecasted cash flows:
Two mutually exclusive projects have the following forecasted
cash flows:
Year A B
0 -20,000 -20,000
1 10,000 0
2 10,000 0
3 10,000 0
4 10,000 60,000
Compute the internal rate of return for each project.
Compute the NPV for each project if the required rate is
10%.
Which project should be accepted, and why?
Two investment projects which are mutually exclusive both require a $10,000,000 investment. Projected cash flows are:...
Two investment projects which are
mutually exclusive both require a $10,000,000 investment. Projected
cash flows are:
Year
Project
A
Project B
1
$3,500,000 $6,500,000
2
3,500,000
3,000,000
3
3,500,000
3,000,000
4
3,500,000
1,000,000
If your discount rate is 12 percent,
net present value each project and indicate which you would choose
and why.
Two projects being considered by a firm are mutually exclusive and have the following projected cash...
Two projects being considered by a firm are mutually exclusive
and have the following projected cash flows:
Year
Project A
Project B
0
($100,000)
($100,000)
1
39,500
0
2
39,500
0
3
39,500
133,000
Based only on the information
given, which of the two projects would be preferred, and why?
Project A, because it has an even cash inflow stream.
Project B, because it has a higher IRR.
Indifferent, because the projects have equal IRRs.
Include both in the capital...
Two projects being considered by a firm are mutually exclusive and have the following projected cash...
Two projects being considered by a firm are mutually exclusive
and have the following projected cash flows: Project A Project B
Year Cash Flow Cash Flow
Proj A Project B
0 -$300,000 -$300,000
1 145,500 $150,000
2 145,500 -$ 40,000
3 145,500 $370,000
The firm’s cost of capital is 10 percent. Based only on
the information given,
What are the NPV for Project A and B? Which project do you
choose based on the NPV?
What are the payback periods...
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