Question
In: Finance
. 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 the above cash flows and a cost of capital (discount rate) of 10%, which of the following statements is the most accurate:
(a) If the company uses IRR only in evaluating projects, project B would be selected.
(b) Project A would be selected if the company uses IRR and payback period for the evaluation of projects.
(c) Project B would be selected if the company uses NPV and IRR for the evaluation of projects.
(d) Project A would be selected if the company uses NPV for the evaluation of projects.
(e) None of the above
Solutions
jeff jeffy answered 1 year agoRelated Solutions
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...
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...
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...
Jamison is considering two mutually exclusive projects with the following cash flows and the cost of...
Jamison is considering two mutually exclusive projects with the
following cash flows and the cost of capital of 10%.
Year XX YY
0 -$1,000 -$1,200
1 $800 $700
2 $800 $700
3 $700
a) Based on Annualized NPV, which project would you choose? Why
ANPV is better than NPV in this case.?
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...
A firm is considering two mutually exclusive projects, X and Y, with the following cash flows:...
A firm is considering two mutually exclusive projects, X and Y,
with the following cash flows: 0 1 2 3 4 Project X -$1,000 $110
$300 $400 $700 Project Y -$1,000 $900 $100 $55 $45 The projects are
equally risky, and their WACC is 10%. What is the MIRR of the
project that maximizes shareholder value? Round your answer to two
decimal places. Do not round your intermediate calculations.
A firm is considering two mutually exclusive projects, X and Y, with the following cash flows:...
A firm is considering two mutually exclusive projects, X and Y,
with the following cash flows:
0
1
2
3
4
Project X
-$1,000
$100
$300
$400
$650
Project Y
-$1,000
$1,000
$110
$45
$55
The projects are equally risky, and their WACC is 10%. What is
the MIRR of the project that maximizes shareholder value? Do not
round intermediate calculations. Round your answer to two decimal
places.
%_____
A firm is considering two mutually exclusive projects, X and Y, with the following cash flows:...
A firm is considering two mutually exclusive projects, X and Y,
with the following cash flows: 0 1 2 3 4 Project X -$1,000 $110
$280 $400 $700 Project Y -$1,000 $1,100 $110 $45 $50 The projects
are equally risky, and their WACC is 11%. What is the MIRR of the
project that maximizes shareholder value? Round your answer to two
decimal places. Do not round your intermediate calculations.
The Winston Co. is considering two mutually exclusive projects with the following cash flows: &nbs
The Winston Co. is considering two mutually exclusive projects
with the following cash flows:
Project
A
Project B
Year
Cash
Flow
Cash Flow
0
-$75,000
-$60,000
1
$30,000
$25,000
2
$35,000
$30,000
3
$35,000
$25,000
B-1
what is the IRR of project A?
B-2
What is the IRR of project B?
B-3
Based on the IRR rule, which project should be accepted and
why?
B-4...
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