Question
In: Finance
MKG, LLC, has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow...
- MKG, LLC, has identified the following two mutually exclusive
projects:
|
Year |
Cash Flow (A) |
Cash Flow (B) |
||||||
|
0 |
−$ |
68,000 |
−$ |
68,000 |
||||
|
1 |
44,000 |
30,200 |
||||||
|
2 |
38,000 |
34,200 |
||||||
|
3 |
25,000 |
40,000 |
||||||
|
4 |
15,600 |
24,200 |
||||||
- What is the IRR for each of these projects? If you apply the IRR decision rule, which project should the company accept?
- Assume the required return is 14%. What is the NPV for each of these projects? Which project will you choose if you apply the NPV decision rule?
Over what range of discount rates would you choose Project A? Over what range of discount rates would you choose Project B? At what discount rate are you indifferent between the 2 projects?
Solutions
jeff jeffy answered 2 years agoRelated Solutions
Heurich, LLC, has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow...
Heurich, LLC, has identified the
following two mutually exclusive projects:
Year
Cash Flow (A)
Cash Flow (B)
0
?$
90,000
?$
90,000
1
42,000
22,000
2
33,000
30,000
3
26,000
35,000
4
21,000
43,000
Requirement
1:
(a)
What is the IRR for each of these projects?
(Do not round intermediate
calculations. Enter your answer as a percentage
rounded to 2 decimal places (e.g.,
32.16).)
Internal rate
of return
Project A
%
Project B
%
(b)
If you apply the...
Zayas, LLC, has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow...
Zayas, LLC, has identified the following two mutually exclusive
projects:
Year
Cash Flow (A)
Cash Flow (B)
0
−$
54,000
−$
54,000
1
30,000
17,600
2
24,000
21,600
3
18,000
26,000
4
12,800
25,600
a. What is the IRR for each of these projects?
(Do not round intermediate calculations and enter your
answers as a percent rounded to 2 decimal places, e.g.,
32.16.)
Internal rate of return
Project A
%
Project B
%
If you apply the IRR decision rule,...
Zayas, LLC, has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow...
Zayas, LLC, has identified the following two mutually exclusive
projects:
Year
Cash Flow (A)
Cash Flow (B)
0
−$
53,000
−$
53,000
1
29,000
16,700
2
23,000
20,700
3
17,500
25,000
4
12,600
25,700
Over what range of discount rates would you choose Project A?
Over what range of discount rates would you choose Project B?
At what discount rate would you be indifferent between these two
projects?
Zayas, LLC, has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow...
Zayas, LLC, has identified the following two mutually exclusive
projects:
Year
Cash Flow (A)
Cash Flow (B)
0
−$
53,000
−$
53,000
1
29,000
16,700
2
23,000
20,700
3
17,500
25,000
4
12,600
25,700
What is the IRR for each of these projects?
If you apply the IRR decision rule, which project should the
company accept?
Assume the required return is 13 percent. What is the NPV for
each of these projects?
Which project will you choose if you apply...
Zayas, LLC, has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow...
Zayas, LLC, has identified the following two mutually exclusive
projects: Year Cash Flow (A) Cash Flow (B) 0 - 78500 -78500 1
43000 21000 2 29000 28000 3 23000 34000 4 21000
41000 if the required return is 12 percent, what is the NVP for
each of these projects? Which project will you choose if you apply
the NVP decision rule? Which project should the company accept?
What discount rate would you be indifferent between these two
projects ?
An investor has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash...
An investor has identified the
following two mutually exclusive projects:
Year
Cash Flow
(A)
Cash Flow
(B)
0
–$39,000
–$39,000
1
19,200
5,800
2
14,700
12,300
3
12,200
18,800
4
9,200
22,800
Required:
(a)
What is the IRR for
Project A?
(b)
What is the IRR for
Project B?
(c)
If the required
return is 9 percent, what is the NPV for Project A?
(d)...
Mahjong, Inc., has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow...
Mahjong, Inc., has identified the following two mutually
exclusive projects:
Year
Cash Flow
(A)
Cash Flow
(B)
0
–$37,400
–$37,400
1
19,750
7,300
2
15,270
13,800
3
12,750
20,270
4
9,750
24,270
Required:
(a)
What is the IRR for Project
A?
(Click to select)23.45%22.77%23.91%22.09%21.63%
(b)
What is the IRR for Project
B?
(Click to select)21.31%21.97%23.07%22.63%20.87%
(c)
If the required return is 10
percent, what is the NPV for...
Bruin, Inc., has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow...
Bruin, Inc., has identified the following two mutually exclusive
projects:
Year
Cash Flow (A)
Cash Flow (B)
0
-37,500
-37,500
1
17,300
5,700
2
16,200
12,900
3
13,800
16,300
4
7,600
27,500
What is the IRR for each of these projects? Using the IRR
decision rule, which project should the company accept? Is this
decision necessarily correct?
If the required return is 11 percent, what is the NPV for each
of these projects? Which project will the company choose if...
Maple, Inc., has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow...
Maple, Inc., has identified the following two mutually exclusive
projects:
Year
Cash Flow (A)
Cash Flow (B)
0
–$
24,500
–$
24,500
1
12,300
3,700
2
13,200
10,100
3
10,500
14,600
4
12,900
25,000
Project A’s IRR equals ___________ and project B’s IRR equals
_______. Based on the IRR measures alone, you would choose project
_____?
Select one:
A. 35.01%; 24.57%; A
B. 35.01%; 24.57%; B
C. 35.01%; 29.48%; A
D. 35.01%; 29.48%; B
E. 29.48%; 24.57%; A
AngryBaby Company has identified the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow...
AngryBaby Company has identified the following two mutually
exclusive projects:
Year
Cash Flow (A)
Cash Flow (B)
0
-$43,500
-$43,500
1
21,410
6,400
2
18,450
14,300
3
13,800
22,900
4
6,900
25,000
What is the IRR for each of these projects (Excel or financial
calculator is required)? Using the IRR decision rule, which project
should the company accept? If the required return is 14 percent,
what is the NPV for each of these projects? Which project will the
company choose...
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