Question
In: Finance
You are considering two independent projects that have a required return of 15 percent. Project A...
You
are considering two independent projects that have a required
return of 15 percent. Project A has an initial cost of $198,700 and
cash inflows of $67,200, $109,600, and $88,700 for years 1 to 3
respectively. Project B has an initial cost of $102,000 and cash
inflows of $37,600 and $91,200 for years 1 and 2, respectively.
Given this information, which one of the following statements is
correct based on the NPV and IRR methods of analysis?
You should accept both projects
You should reject both projects
You should accept A and reject B
You should accept B and reject A
NPV indicates accept Project A while IRR indicates accepting
Project B
Solutions
jeff jeffy answered 1 year agoRelated Solutions
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You are considering two independent projects with the following cash flows. The required return for both...
You are considering two independent projects with the following
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Year Project A Project B
0 -$950,000 -$125,000
1 $330,000 $ 55,000
2 $400,000 $ 50,000
3 $450,000 $ 50,000
A. You should accept project B since it has the higher IRR and
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B. You should accept project A because it has...
A company is considering two mutually exclusive projects, the company’s required return is 8 percent and...
A company is considering two mutually exclusive projects, the
company’s required return is 8 percent and they do not have any
capital constraints. Based on the profitability index, what is your
recommendation concerning these projects?
Project A Project
B
Year
Cash
Flow Year
Cash Flow
0 -$38,500 0 -$42,000
1 $20,000 1
$10,000
2 $24,000 2
$40,000
Neither project is acceptable.
You should accept both projects since both of their PIs are
greater than 1.
You should accept project A since it has the higher PI.
You should accept...
Coore Manufacturing has the following two possible projects. The required return is 12 percent. Year Project...
Coore Manufacturing has the following two possible projects. The
required return is 12 percent.
Year
Project Y
Project Z
0
–$82,000
–$81,000
1
31,160
34,000
2
31,160
32,800
3
31,160
30,500
4
31,160
27,300
a.
What is the profitability index for each project?
(Do not round intermediate calculations
and round your answers to 3 decimal places, e.g.,
32.161.)
b.
What is the NPV for each project? (Do
not round intermediate calculations and round your
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(NPV, PI, and IRR calculations) You are considering two independent projects, project A and project B....
(NPV,
PI, and IRR
calculations)
You are considering two independent projects, project A and
project B. The initial cash outlay associated with project A is
$50,000
and the initial cash outlay associated with project B is
$70,000
The required rate of return on both projects is
9
percent. The expected annual free cash inflows from each project
are in the popup window:
Calculate the
NPV,
PI,
and IRR for each project and indicate if the project should be
accepted.
...
(NPV, PI, and IRR calculations) You are considering two independent projects, project A and project B....
(NPV,
PI, and IRR
calculations)
You are considering two independent projects, project A and
project B. The initial cash outlay associated with project A is
$50,000
and the initial cash outlay associated with project B is
$70,000
The required rate of return on both projects is
12
percent. The expected annual free cash inflows from each project
are in the popup window:
.Calculate the
NPV,
PI,
and IRR for each project and indicate if the project should be
accepted.
a....
Your division is considering two projects. The required rate of return for both projects is 10%....
Your division is considering two projects. The required rate of
return for both projects is 10%. Below are the cash flows of both
the projects:
Projects
Initial investment
Year 1
Year 2
Year 3
Year 4
A
-$30
$5
$10
$15
$20
B
-$30
$20
$10
$8
$6
Calculate the Payback period and discounted payback period. Why
are they different? .
Calculate the NPV for both the projects
Which projects should be accepted?
if both the projects are independent....
eBook Ziege Systems is considering the following independent projects for the coming year: Project Required Investment...
eBook
Ziege Systems is considering the following independent projects
for the coming year:
Project
Required
Investment
Rate of
Return
Risk
A
$4 million
10.75%
High
B
5 million
13.25
High
C
3 million
8.75
Low
D
2 million
7.75
Average
E
6 million
11.75
High
F
5 million
11.75
Average
G
6 million
5.75
Low
H
3 million
10.50
Low
Ziege's WACC is 9.25%, but it adjusts for risk by adding 2% to
the WACC for high-risk projects and subtracting...
Ziege Systems is considering the following independent projects for the coming year: Project Required Investment Rate...
Ziege Systems is considering the following independent projects
for the coming year:
Project
Required
Investment
Rate of
Return
Risk
A
$4 million
13.25%
High
B
5 million
10.75
High
C
3 million
8.75
Low
D
2 million
8.00
Average
E
6 million
11.75
High
F
5 million
11.75
Average
G
6 million
6.00
Low
H
3 million
10.50
Low
Ziege's WACC is 9.25%, but it adjusts for risk by adding 2% to
the WACC for high-risk projects and subtracting 2%...
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