Question

In: Finance

XYZ Inc. is considering Projects S and L, whose cash flows are shown below. Calculate NPV...

XYZ Inc. is considering Projects S and L, whose cash flows are shown below. Calculate NPV and MIRR of these projects and if these are mutually exclusive which one you choose under each method?

WACC: 8.75%

Year           0       1       2       3       4

CFS          -$1,100   $375    $375    $375    $375

CFL          -$2,200   $725    $725    $725    $725

Solutions

Expert Solution

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

Nast Inc. is considering Projects S and L, whose cash flows are shown below. These projects...
Nast Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the higher MIRR rather than the one with the higher NPV, how much value will be forgone? Note that under some conditions choosing projects on the basis of the MIRR will cause $0.00 value to be lost. WACC: 10.75% 0 1 2 3 4 CFS -$1,100...
Yonan Inc. is considering Projects S and L, whose cash flows are shown below. These projects...
Yonan Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the shorter payback, some value may be forgone. How much value will be lost in this instance? Note that under some conditions choosing projects on the basis of the shorter payback will not cause value to be lost WACC 11.75% 0 1 2 3 4 CFs...
Nast Inc. is considering Projects S and L, whose cash flows are shown below. These projects...
Nast Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the higher MIRR rather than the one with the higher NPV, how much value will be forgone? Note that under some conditions choosing projects on the basis of the MIRR will cause $0.00 value to be lost. WACC: 10.75% 0 1 2 3 4 CFS -$1,100...
Poston Inc. is considering Projects S and L, whose cash flows are shown below. These projects...
Poston Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive (must choose one or the other), equally risky, and not repeatable. If the decision is made by choosing the project with the higher IRR, how much value will be forgone? You must calculate the IRR and NPV for both projects select the project with the higher IRR and then calculate how much less the NPV is by selecting the project with...
Nast Inc. is considering Projects S and L, whose cash flows are shown below. These projects...
Nast Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the higher MIRR rather than the one with the higher NPV, how much value will be forgone? Note that under some conditions choosing projects on the basis of the MIRR will cause $0.00 value to be lost. WACC: 10.75% 0 1 2 3 4 CFS -$1,100...
Sexton Inc. is considering Projects S and L, whose cash flows are shown below. These projects...
Sexton Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the higher IRR, how much value will be forgone? Note that under certain conditions choosing projects on the basis of the IRR will not cause any value to be lost because the one with the higher IRR will also have the higher NPV, so no value...
Sexton Inc. is considering Projects S and L, whose cash flows are shown below. These projects...
Sexton Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the higher IRR, how much value will be forgone? Note that under certain conditions choosing projects on the basis of the IRR will not cause any value to be lost because the one with the higher IRR will also have the higher NPV, so no value...
Charlestown Inc. is considering Projects S and L, whose cash flows are shown below. These projects...
Charlestown Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. WACC: 9.00% 0 1 2 3 4 CFS -$2,000 $950 $950 $950 $950 CFL -$9,000 $3,200 $3,200 $3,200 $3,200 If the decision is made by choosing the project with the higher IRR, how much value will be forgone? What is the payback period for Project S? What is the discounted payback period for Project L? What...
- Langton Inc. is considering Projects S and L, whose cash flows are shown below. These...
- Langton Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. The CEO believes the IRR is the best selection criterion, while the CFO advocates the NPV. If the decision is made by choosing the project with the higher IRR rather than the one with the higher NPV, how much, if any, value will be forgone? In other words, what's the NPV of the chosen project...
A firm is considering Projects S and L, whose cash flows are shown below. These projects...
A firm is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. The CEO wants to use the IRR criterion, while the CFO favors the NPV method. You were hired to advise the firm on the best procedure. If the wrong decision criterion is used, how much potential value would the firm lose? WACC: 6.75% 0 1 2 3 4 CFS -$1,025 $380 $380 $380 $380 CFL -$2,150...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT