Question

In: Finance

Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of...

Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of $3,000 per year for 5 years. Project L costs $25,000 and is expected to produce cash flows of $7,400 per year for 5 years.

Calculate the two projects' NPVs, assuming a cost of capital of 12%. Do not round intermediate calculations. Round your answers to the nearest cent.

Project S: $  

Project L: $  

Which project would be selected, assuming they are mutually exclusive?

Based on the NPV values, -Select-Project SProject LItem 3 would be selected.

Calculate the two projects' IRRs. Do not round intermediate calculations. Round your answers to two decimal places.

Project S:   %

Project L:   %

Which project would be selected, assuming they are mutually exclusive?

Based on the IRR values, -Select-Project SProject LItem 6 would be selected.

Calculate the two projects' MIRRs, assuming a cost of capital of 12%. Do not round intermediate calculations. Round your answers to two decimal places.

Project S:   %

Project L:   %

Which project would be selected, assuming they are mutually exclusive?

Based on the MIRR values, -Select-Project SProject LItem 9 would be selected.

Calculate the two projects' PIs, assuming a cost of capital of 12%. Do not round intermediate calculations. Round your answers to three decimal places.

Project S:

Project L:

Which project would be selected, assuming they are mutually exclusive?

Based on the PI values, -Select-Project SProject LItem 12 would be selected.

Which project should actually be selected?

-Select-Project SProject LItem 13 should actually be selected.

Solutions

Expert Solution

Answer : Below is the sheet showing Calculation of NPV,IRR,MIRR and PI

Based On NPV Project L should be selected as it has Higher Net Present Value.

Based on IRR Project S should be selected as it has Higher IRR

Based on MIRR Project S should be selected as it has Higher MIRR.

Based on PI Project S should be selected as it has Higher PI.

In case of Conflict between IRR and NPV the project L will be selected as it has Higher Net present Value.

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of...
Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of $4,000 per year for 5 years. Project L costs $21,000 and is expected to produce cash flows of $8,000 per year for 5 years. Calculate the two projects’ NPVs, IRRs, MIRRs, PIs, and Pay Back Period assuming a cost of capital of 12%. Which project would be selected, assuming they are mutually exclusive, using each ranking method? Which should actually be selected?
Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of...
Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of $3,000 per year for 5 years. Project L costs $25,000 and is expected to produce cash flows of $7,400 per year for 5 years. Calculate the two projects' NPVs, assuming a cost of capital of 12%. Do not round intermediate calculations. Round your answers to the nearest cent. Project S: $   Project L: $   Which project would be selected, assuming they are mutually exclusive?...
Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of...
Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of $3,000 per year for 5 years. Project L costs $25,000 and is expected to produce cash flows of $7,400 per year for 5 years. Calculate the two projects' PIs, assuming a cost of capital of 12%. Do not round intermediate calculations. Round your answers to three decimal places. Project S:   Project L:  
8. Project R has a cost of $ 10,000 and in expected to produce cash flows...
8. Project R has a cost of $ 10,000 and in expected to produce cash flows per year of $ 4,000 for 3 years. Project S has a cost of $20,000 and in expected to produce cash flows of $ 7,000 per year for 4 years. Calculate the 2 projects' NPVs, IRRs, MIRRs, and PIs, assuming a cost of capital of 11%. Which project should be selected ?
Capital Budgeting Methods Project S has a cost of $10,000 and is expected to produce benefits...
Capital Budgeting Methods Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of $3,500 per year for 5 years. Project L costs $25,000 and is expected to produce cash flows of $8,000 per year for 5 years. Calculate the two projects' NPVs, assuming a cost of capital of 14%. Do not round intermediate calculations. Round your answers to the nearest cent. Project S: $   Project L: $   Which project would be selected, assuming they...
Capital Budgeting Methods Project S has a cost of $10,000 and is expected to produce benefits...
Capital Budgeting Methods Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of $3,000 per year for 5 years. Project L costs $25,000 and is expected to produce cash flows of $7,400 per year for 5 years. Calculate the two projects' NPVs, assuming a cost of capital of 12%. Do not round intermediate calculations. Round your answers to the nearest cent. Project S: $   Project L: $   Which project would be selected, assuming they...
Capital Budgeting Methods Project S has a cost of $10,000 and is expected to produce benefits...
Capital Budgeting Methods Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of $3,000 per year for 5 years. Project L costs $25,000 and is expected to produce cash flows of $7,300 per year for 5 years. Calculate the two projects' NPVs, assuming a cost of capital of 12%. Round your answers to the nearest cent. Project S $ Project L $ Which project would be selected, assuming they are mutually exclusive? Calculate the...
Capital Budgeting Methods Project S has a cost of $10,000 and is expected to produce benefits...
Capital Budgeting Methods Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of $3,000 per year for 5 years. Project L costs $25,000 and is expected to produce cash flows of $7,300 per year for 5 years. Calculate the two projects' NPVs, assuming a cost of capital of 12%. Round your answers to the nearest cent. Project S $     Project L $     Which project would be selected, assuming they are mutually exclusive? -Select-Project SProject...
10-10. Project A has a cost of $22,000 and is expected to produce benefits (cash flows)...
10-10. Project A has a cost of $22,000 and is expected to produce benefits (cash flows) of $7,000 per year for 5 years. Project B costs $70,000 and is expected to produce cash flows of $20,000 per year for 5 years. Calculate the two projects' NPVs, IRRs, MIRRs, and PIs, assuming a cost of capital of 10%. Which project would be selected, assuming they are mutually exclusive, using each ranking method? Which should actually be selected?
If a project has a cost of $10,000, expected net cash flows of $1500 a year...
If a project has a cost of $10,000, expected net cash flows of $1500 a year for 12 years and you use a discount rate of 6%, what is the following: Payback period (no application of discount rate) Payback period (using discount rate) NPV IRR Should the project be accepted? If another project has a cost of $10,000 and has expected life of 8 years and it will generate $3000 a year should you accept the project if your boss...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT