Question
In: Finance
. Home Grown Café has the following two projects with their cash flows below: Year Project...
. Home Grown Café has the following two projects with their cash flows below:
|
Year |
Project 1 CFs |
Project 2 CFs |
|
0 |
-$41,600 |
-$30000 |
|
1 |
16000 |
6000 |
|
2 |
13000 |
11000 |
|
3 |
18000 |
12000 |
|
4 |
15000 |
19000 |
Calculate the IRR (to the closest whole number) for each project and decide which project should be accepted if the required rate of return (cost of capital) is 11% and a) the projects are independent, b) the projects are mutually exclusive.
Solutions
jeff jeffy answered 1 year agoRelated Solutions
The following are the cash flows of two projects: Year Project A Project B...
The following are the cash flows of two projects:
Year Project A Project B
0 -250 -250
1 130 150
2 130 150
3 130 150
4 130
If the opportunity cost is 10%, what is the profitability index
for each project?
Project Profitability Index
A
B
The following are the cash flows of two projects: Year Project A Project B 0 ?$...
The following are the
cash flows of two projects:
Year
Project A
Project B
0
?$
380
?$
380
1
210
280
2
210
280
3
210
280
4
210
If the opportunity
cost of capital is 11%, what is the profitability index for each
project? (Do not round intermediate calculations. Round
your answers to 4 decimal places.)
The following are the cash flows of two projects: Year Project A Project B 0 ?$...
The following are the cash flows of two projects:
Year Project A Project B
0 ?$ 280 ?$ 280
1 160 180
2 160 180
3 160 180
4 160
If the opportunity cost of capital is 10%, what is the
profitability index for each project? (Do not round intermediate
calculations. Round your answers to 4 decimal places.) Project A
Profitability Index Project B
The following are the cash flows of two projects: Year Project A Project B 0 −$...
The following are the cash flows of two projects: Year Project A
Project B 0 −$ 290 −$ 290 1 170 190 2 170 190 3 170 190 4 170 If
the opportunity cost of capital is 11%, what is the profitability
index for each project? (Do not round intermediate calculations.
Round your answers to 4 decimal places.)
The following are the cash flows of two projects: Year Project A Project B 0 $...
The following are the cash flows of two projects:
Year
Project A
Project B
0
$
(330)
$
(330)
1
160
230
2
160
230
3
160
230
4
160
If the opportunity cost of capital is 12%, what is the
profitability index for each project? (Do not round
intermediate calculations. Round your answers to 4 decimal
places.)
Project Profitability Index:
A
B
The following are the cash flows of two projects: Year Project A Project B 0 ?$...
The following are the cash flows of two projects: Year Project A
Project B 0 ?$ 220 ?$ 220 1 100 120 2 100 120 3 100 120 4 100 If
the opportunity cost of capital is 10%, what is the profitability
index for each project? (Do not round intermediate calculations.
Round your answers to 4 decimal places.)
The following are the cash flows of two projects: Year Project A Project B 0 $...
The following are the
cash flows of two projects:
Year
Project A
Project B
0
$
(260
)
$
(260
)
1
140
160
2
140
160
3
140
160
4
140
a. Calculate the NPV for both projects if the
opportunity cost of capital is 16%. (Do not round
intermediate calculations. Round your answers to 2 decimal
places.)
Project A
Project B
b.
Suppose that you can choose only one of these projects. Which would
you choose?
Project A...
The following are the cash flows of two projects: Year Project A Project B 0 $...
The following are the cash flows of two projects:
Year
Project A
Project B
0
$
(330
)
$
(330
)
1
160
230
2
160
230
3
160
230
4
160
a. If the opportunity cost of capital is 12%,
calculate the NPV for both projects. (Do
not round intermediate calculations. Round your answers to 2
decimal places.)
b. Which of these projects is worth
pursuing?
****NOTE**** You are finding the NPV, NOT the Profitability
index!
The following are the cash flows of two projects: Year Project A Project B 0 $(340)...
The following are the cash flows of two projects:
Year
Project A
Project B
0
$(340)
$(340)
1
170
240
2
170
240
3
170
240
4
170
A.) Calculate the NPV for both projects if the opportunity costs
of capital is 15%. *(2 decimal places, do not round intermediate
calculations)
B.) Suppose you can choose one one of these projects, which
would you choose?
The following are the cash flows of two projects: Year Project A Project B 0 −$330...
The following are the cash flows of two projects:
Year
Project A
Project B
0
−$330
−$330
1
160
230
2
160
230
3
160
230
4
160
a.
Calculate the NPV for both projects if the opportunity cost of
capital is 17%. (Do not round intermediate calculations.
Round your answers to 2 decimal places.)
Project
NPV
A
$
B
b.
Suppose that you can choose only one of...
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