Question
In: Finance
Given the following two mutually exclusive project, calculate the equivalent annual annuity for Project B. Assume...
Given the following two mutually exclusive project, calculate the equivalent annual annuity for Project B. Assume a required rate of return of 12%. (Round to 2 decimals)
| Year | Project A | Project B |
| 0 | -500 | -600 |
| 1 | 320 | 300 |
| 2 | 320 | 300 |
| 3 | 320 | 300 |
| 4 | 300 |
Solutions
Expert Solution
| Discount rate | 12.0000% | ||
| Cash flows | Year | Discounted CF= cash flows/(1+rate)^year | Cumulative cash flow |
| (600.00) | 0 | (600.00) | (600.00) |
| 300.000 | 1 | 267.86 | (332.14) |
| 300.000 | 2 | 239.16 | (92.98) |
| 300.000 | 3 | 213.53 | 120.55 |
| 300.000 | 4 | 190.66 | 311.20 |
NPV of B = 311.20
PV = 311.20, FV = 0, N = 4, rate = 12%
use PMT function in Excel
EAA = 102.46
jeff jeffy answered 1 year agoRelated Solutions
The following data are given for two mutually exclusive project proposals: (PhP) Project A Project B...
The following data are given for two mutually exclusive project
proposals:
(PhP)
Project A
Project B
Initial Investment
50,000.00
60,000.00
Annual Net Cash Inflows:
Year 1
15,000.00
30,000.00
Year 2
14,000.00
14,000.00
Year 3
12,000.00
10,000.00
Year 4
12,000.00
10,000.00
Year 5
12,000.00
10,000.00
Assuming that the firm’s required rate of return is 20%, compute
the following:
a) Net Present Value
b) Payback Period
Which project would you undertake? Justify
QUESTION TWO [30] The following 2 mutually exclusive projects (Project A and Project B) are available...
QUESTION TWO [30]
The following 2 mutually exclusive projects (Project A and
Project B) are available to Simonsbosch Farm. They are producers of
Rooi Bos tea. The initial cash outlay and cash flows are shown
below and Simonsbosch will use straight line depreciation over each
of the assets 4 year life and there will be no residual value on
either investment.
Years
Cash Flows (A)
Cash Flows (B)
0 (Investment)
-240 000
-90 000
1
28 000
40 000
2...
You are considering the following two mutually exclusive projects. YEAR PROJECT (A) PROJECT (B) 0&
You are considering the following two mutually exclusive
projects.
YEAR
PROJECT
(A) PROJECT
(B)
0
-$35,000
-$35,000
1
22,000
13,000
2
20,000
21,000
3
13,000
22,000
What is the internal rate of return of PROJECT A?
You are considering the following two mutually exclusive projects. YEAR PROJECT (A) PROJECT (B) 0&
You are considering the following two mutually exclusive
projects.
YEAR
PROJECT
(A) PROJECT
(B)
0
-$35,000
-$35,000
1
22,000
13,000
2
20,000
21,000
3
13,000
22,000
What is the crossover point?
Consider the following cash flows on two mutually exclusive projects: Year Project A Project B 0...
Consider the following cash flows on two mutually exclusive
projects:
Year
Project A
Project B
0
–$
68,000
–$
83,000
1
48,000
47,000
2
43,000
56,000
3
38,000
59,000
The cash flows of Project A are expressed in real terms, whereas
those of Project B are expressed in nominal terms. The appropriate
nominal discount rate is 11 percent and the inflation rate is 5
percent. Calculate the NPV for each project. (Do not round
intermediate calculations and round your answers...
You are considering the following two mutually exclusive projects. Project A Project B Year 0 -$10,000...
You are considering the following two mutually exclusive
projects. Project A Project B Year 0 -$10,000 -$20,000 Year 1 $
3,000 $ 5,000 Year 2 $ 8,000 $ 7,000 Year 3 $ 4,000 $12,000 Year 4
$ 2,000 $10,000 The required return on each project is 12 percent.
Which project should you accept and what is the best reason for
that decision? a. Project B; because it has the higher net present
value b. Project A; because it pays back...
Mutually exclusive investments. The following are cash flows of two projects. Year Project A Project B 0...
Mutually exclusive investments.
The following are cash flows of two projects.
Year Project A Project B
0 $ (200) $ (200)
1 80 100
2 80 100
3 80 100
4 80
Calculate the NPV for both projects if the discount rate is
11%(Do not intermediate calculations.Round your answer to 2 decimal
places)
Suppose that you can only choose one of the these projects.
Which would you choose ?
project A
Project B
Neither
Consider the following three mutually exclusive investment project alternatives (A, B, C). Use the annual worth...
Consider the following three mutually exclusive investment
project alternatives (A, B, C). Use the annual worth
analysis (AW) to determine the best investment alternative
assuming MARR=15%.
Project
name:
A
B
C
Cash Flow (Year
0):
-200,000
-300,000 -400,000
Cash Flow (Year
1-N)
+150,000
+180,000 +150,000
Salvage value at year
N:
+30,000
+50,000
+60,000
Project Life
(N):
2 years
3 years
6 years
find the equivalent annual annuity of the following series: a project is expected to generate $15034...
find the equivalent annual annuity of the following series: a
project is expected to generate $15034 this year (end of year) and
is expected to grow every year for 20years by $8043. (note: no
units, 4 decimal points, 1% threshold)
find the equivalent annual annuity of the following series: a project is expected to generate $17111...
find the equivalent annual annuity of the following series: a
project is expected to generate $17111 this year (end of year) and
is expected to grow every year for 16years by $6098. (note: no
units, 4 decimal points, 1% threshold) i=5%
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Read the questions below and answer as if you are the CEO of the company: When...
- A bicycle wheel is rotating at 41 rpm when the cyclist begins to pedal harder, giving...
- Your blog post should have a unique title. It should summarize the current event source with...
- Williams Ltd manufactures and sells a single product. The selling price is R18. The following information...
- Use JAVA language. Using the switch method concept create a program in which you have an...
- Write a short and simple C++ program (must be able to have custom inputs): Design a...
- Critical thinking is ?
ADVERTISEMENT