Question
In: Finance
Assume the projects below are mutually exclusive and the WACC is 10%. Which project should be...
Assume the projects below are mutually exclusive and the WACC is 10%. Which project should be chosen based on each of the following decision rules: NPV, IRR, MIRR, and Payback? Overall, which project should be chosen?
|
Year |
Project A |
Project B |
|
0 |
-$75,000.00 |
-$110,000.00 |
|
1 |
$46,000.00 |
$50,000.00 |
|
2 |
$24,000.00 |
$35,000.00 |
|
3 |
$10,000.00 |
$20,000.00 |
|
4 |
$10,000.00 |
$10,000.00 |
|
5 |
$6,000.00 |
$10,000.00 |
|
6 |
$4,000.00 |
$30,000.00 |
Solutions
jeff jeffy answered 2 years agoRelated Solutions
Capital budgeting criteria: mutually exclusive projects A firm with a WACC of 10% is considering the...
Capital budgeting criteria: mutually exclusive projects
A firm with a WACC of 10% is considering the following mutually
exclusive projects:
0
1
2
3
4
5
Project A
-$250
$50
$50
$50
$200
$200
Project B
-$600
$300
$300
$70
$70
$70
Which project would you recommend?
Select the correct answer.
I. Both Projects A and B, since both projects have IRR's >
0.
II. Project A, since the NPVA >
NPVB.
III. Both Projects A and B, since both...
Capital budgeting criteria: mutually exclusive projects A firm with a WACC of 10% is considering the...
Capital budgeting criteria: mutually exclusive projects
A firm with a WACC of 10% is considering the following mutually
exclusive projects:
Project A
-$300
$75
$75
$75
$220
$220
Project B
-$550
$250
$250
$80
$80
$80
Which project would you recommend?
Select the correct answer.
I. Both Projects A and B, since both projects have IRR's >
0.
II. Project A, since the NPVA >
NPVB.
III. Project B, since the NPVB >
NPVA.
IV. Neither A or B, since...
A firm with a WACC of 10% is considering the following mutually exclusive projects: 0 1...
A firm with a WACC of 10% is considering the following mutually
exclusive projects:
0
1
2
3
4
5
Project 1
-$250
$55
$55
$55
$190
$190
Project 2
-$650
$300
$300
$40
$40
$40
Which project would you recommend?
Select the correct answer.
a. Neither Project 1 nor 2, since each project's NPV <
0.
b. Project 2, since the NPV2 >
NPV1.
c. Both Projects 1 and 2, since both projects have IRR's >
0.
d. Both...
9) A firm with a WACC of 10% is considering the following mutually exclusive projects: 0...
9)
A firm with a WACC of 10% is considering the following mutually
exclusive projects:
0
1
2
3
4
5
Project 1
-$200
$70
$70
$70
$165
$165
Project 2
-$550
$300
$300
$130
$130
$130
Which project would you recommend?
Select the correct answer.
a. Neither Project 1 nor 2, since each project's NPV <
0.
b. Project 2, since the NPV2 >
NPV1.
c. Both Projects 1 and 2, since both projects have IRR's >
0.
d....
A firm with a WACC of 10% is considering the following mutually exclusive projects: 0 1...
A firm with a WACC of 10% is considering the following mutually
exclusive projects: 0 1 2 3 4 5 Project 1 -$200 $40 $40 $40 $235
$235 Project 2 -$450 $200 $200 $80 $80 $80 Which project would you
recommend? Select the correct answer.
a. Both Projects 1 and 2, since both projects have IRR's >
0.
b. Neither Project 1 nor 2, since each project's NPV < 0.
c. Both Projects 1 and 2, since both projects have...
A company is considering three mutually exclusive projects with the below provided information. Which project the...
A company is considering three mutually exclusive projects with
the below provided information. Which project the company should
accept if its cost of capital is
10%?
Preject
Project’s Life in years
Initial Investment
PV of Net Cash Flows at 10%
X
7
-17,000
23,000
Y
6
-16,000
21,000
Z
7
-16,000
21,000
Select one:
a. Project Z
b. Project X
c. Project Y
d. Projects X and Y
Problem 11-10 Capital Budgeting Criteria: Mutually Exclusive Projects. A firm with a WACC of 10% is...
Problem 11-10 Capital Budgeting Criteria: Mutually Exclusive
Projects. A firm with a WACC of 10% is considering the following
mutually exclusive projects:
0 1 2 3 4 5
|--------------|-----------------|-----------------|-----------------|-------------------|
Project A -$200 $75 $75 $75 $190 $190
Project B -$650 $250 $250 $125 $125 $125
Which project would you recommend? Explain.
A firm has a WACC of 8% and is deciding between two mutually exclusive projects. Project...
A firm has a WACC of 8% and is deciding between two mutually
exclusive projects. Project A has an initial investment of $63. The
additional cash flows for project A are: year 1 = $20, year 2 =
$39, year 3 = $67. Project B has an initial investment of $73.The
cash flows for project B are: year 1 = $60, year 2 = $45, year 3 =
$32.
a. What is the payback for project A? (Show your answer...
A firm has a WACC of 11.04% and is deciding between two mutually exclusive projects. Project...
A
firm has a WACC of 11.04% and is deciding between two mutually
exclusive projects. Project A has an initial investment of $64.71.
The additional cash flows for Project A are:
Year 1 = $17.65
Year 2 = $38.98
Year 3 =$44.55.
Project B has an initial investment of $70.01. The cash flows
for Project B are:
Year 1 = $54.71
Year 2 = $48.39
year 3 = $39.00.
Calculate the following:
•Payback Period for Project A:
•Payback Period for...
A firm has a WACC of 13.64% and is deciding between two mutually exclusive projects. Project...
A
firm has a WACC of 13.64% and is deciding between two mutually
exclusive projects.
Project A has an initial investment of $62.12. The additional
cash flows for Project A are:
Year 1 = $19.26
Year 2 = $37.74
Year 3 = $58.27
Project B has an initial investment of $71.69. The cash flows
for Project B are:
Year 1 = $56.39
Year 2 = $37.73
Year 3 = $33.58
Calculate the following:
a. Payback period for Project A
b....
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