Question
In: Economics
Your company is considering three mutually exclusive investments as described in the table below. Based on...
Your company is considering three mutually exclusive investments as described in the table below. Based on a 15-year study period and 10% MARR, you are tasked to determine which investment should be selected. Investment Option 1: Initial Investment: $56,000 Net Annual Revenue: $9,000 Salvage Value: $5,000 Useful Life: 22 Investment Option 2: Initial Investment: $80,000 Net Annual Revenue:$11,500 Salvage Value: $5,000 Useful Life: 15 Investment Option 2: Initial Investment: $76,000 Net Annual Revenue: $11,000 Salvage Value: $3,000 Useful Life: 11 Note: The repeatability assumption cannot be applied. Hint: imputed market value technique will need to be applied to Investment 1 and assume cotermination at 15-years with reinvestment for Investment 3. What is PW of each options? What is the PW of the Investment option 1?
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Rahul Sunny answered 2 years agoRelated Solutions
A company is considering three mutually exclusive projects with the below provided information. Which project the...
A company is considering three mutually exclusive projects with
the below provided information. Which project the company should
accept if its cost of capital is
10%?
Preject
Project’s Life in years
Initial Investment
PV of Net Cash Flows at 10%
X
7
-17,000
23,000
Y
6
-16,000
21,000
Z
7
-16,000
21,000
Select one:
a. Project Z
b. Project X
c. Project Y
d. Projects X and Y
A company has a 13% WACC and is considering two mutually exclusive investments (that cannot be...
A company has a 13% WACC and is considering two mutually
exclusive investments (that cannot be repeated) with the following
cash flows:
0
1
2
3
4
5
6
7
Project A
-$300
-$387
-$193
-$100
$600
$600
$850
-$180
Project B
-$405
$133
$133
$133
$133
$133
$133
$0
What is each project's NPV? Negative values, if any, should be
indicated by a minus sign. Do not round intermediate calculations.
Round your answers to the nearest cent.
Project A:...
A company has a 12% WACC and is considering two mutually exclusive investments (that cannot be...
A company has a 12% WACC and is considering two mutually
exclusive investments (that cannot be repeated) with the following
cash flows:
0
1
2
3
4
5
6
7
Project A
-$300
-$387
-$193
-$100
$600
$600
$850
-$180
Project B
-$400
$133
$133
$133
$133
$133
$133
$0
What is each project's NPV? Negative values, if any, should be
indicated by a minus sign. Do not round intermediate calculations.
Round your answers to the nearest cent.
What is...
A company has a 12% WACC and is considering two mutually exclusive investments (that cannot be...
A company has a 12% WACC and is considering two mutually
exclusive investments (that cannot be repeated) with the following
cash flows:
0
1
2
3
4
5
6
7
Project A
-$300
-$387
-$193
-$100
$600
$600
$850
-$180
Project B
-$400
$135
$135
$135
$135
$135
$135
$0
What is each project's NPV? Negative values, if any, should be
indicated by a minus sign. Do not round intermediate calculations.
Round your answers to the nearest cent.
Project A:...
A company has a 13% WACC and is considering two mutually exclusive investments (that cannot be...
A company has a 13% WACC and is considering two mutually
exclusive investments (that cannot be repeated) with the following
cash flows:
0
1
2
3
4
5
6
7
Project A
-$300
-$387
-$193
-$100
$600
$600
$850
-$180
Project B
-$405
$132
$132
$132
$132
$132
$132
$0
What is each project's NPV? Negative values, if any, should be
indicated by a minus sign. Do not round intermediate calculations.
Round your answers to the nearest cent.
Project A:...
A company has a 12% WACC and is considering two mutually exclusive investments (that cannot be...
A company has a 12% WACC and is considering two mutually
exclusive investments (that cannot be repeated) with the following
cash flows:
0
1
2
3
4
5
6
7
Project A
-$300
-$387
-$193
-$100
$600
$600
$850
-$180
Project B
-$400
$135
$135
$135
$135
$135
$135
$0
What is each project's NPV? Negative values, if any, should be
indicated by a minus sign. Do not round intermediate calculations.
Round your answers to the nearest cent.
Project A:...
A company has a 12% WACC and is considering two mutually exclusive investments (that cannot be...
A company has a 12% WACC and is considering two mutually
exclusive investments (that cannot be repeated) with the following
cash flows:
0
1
2
3
4
5
6
7
Project A
-$300
-$387
-$193
-$100
$600
$600
$850
-$180
Project B
-$405
$135
$135
$135
$135
$135
$135
$0
What is each project's NPV? Negative values, if any, should be
indicated by a minus sign. Do not round intermediate calculations.
Round your answers to the nearest cent.
Project A:...
A company has a 12% WACC and is considering two mutually exclusive investments (that cannot be...
A company has a 12% WACC and is considering two mutually
exclusive investments (that cannot be repeated) with the following
cash flows:
Project A
-$300
-$387
-$193
-$100
$600
$600
$850
-$180
Project B
-$405
$135
$135
$135
$135
$135
$135
$0
What is each project's NPV? Negative values, if any, should be
indicated by a minus sign. Do not round intermediate calculations.
Round your answers to the nearest cent.
Project A: $
Project B: $
What is each project's...
A company has an 11% WACC and is considering two mutually exclusive investments (that cannot be...
A company has an 11% WACC and is considering two mutually
exclusive investments (that cannot be repeated) with the following
cash flows:
0
1
2
3
4
5
6
7
Project A
-$300
-$387
-$193
-$100
$600
$600
$850
-$180
Project B
-$405
$131
$131
$131
$131
$131
$131
$0
What is each project's NPV? Negative values, if any, should be
indicated by a minus sign. Do not round intermediate calculations.
Round your answers to the nearest cent.
Project A:...
A company has an 11% WACC and is considering two mutually exclusive investments (that cannot be...
A company has an 11% WACC and is considering two mutually
exclusive investments (that cannot be repeated) with the following
cash flows:
0
1
2
3
4
5
6
7
Project A
-$300
-$387
-$193
-$100
$600
$600
$850
-$180
Project B
-$400
$131
$131
$131
$131
$131
$131
$0
What is each project's NPV? Negative values, if any, should be
indicated by a minus sign. Do not round intermediate calculations.
Round your answers to the nearest cent.
Project A:...
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