Question

In: Finance

Project A is as follows: $100,000 upfront cost and annual cash flows of $25,000 a year...

Project A is as follows: $100,000 upfront cost and annual cash flows of $25,000 a year for seven years.

Project B is as follows: $100,000 upfront cost and cash flow of $20,000 per year for 8 years.

Project A Payback Period is 4 years and Project B is 5 years.

using that data calculate NPV for projects A and B using a 10% discount rate.

which project do you pick if they are mutually exclusive? Which do you pick if they are independent and the company has enough funds to do all projects?

Solutions

Expert Solution

\

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

Project A is as follows: $100,000 upfront cost and annual cash flows of $25,000 a year...
Project A is as follows: $100,000 upfront cost and annual cash flows of $25,000 a year for seven years. Project B is as follows: $100,000 upfront cost and cash flow of $20,000 per year for 8 years. what are the payback periods for projects A and B?
A 50-year project has a cost of $500,000 and has annual cash flows of $100,000 in...
A 50-year project has a cost of $500,000 and has annual cash flows of $100,000 in years 1-25, and $200,000 in years 26-50. The company's required rate is 8%. Given this information, calculate the NPV of the project.
Calculate the NPV of a 20-year project with a cost of $300,000 and annual cash flows...
Calculate the NPV of a 20-year project with a cost of $300,000 and annual cash flows of $25,000 in years 1-10 and $50,000 in years 11-20. The company's required rate of return is 10%
You have been given a project to evaluate. The upfront cost is $100,000. The project will...
You have been given a project to evaluate. The upfront cost is $100,000. The project will then generate $40,000 in year one, $50,000 in year two, and then $60,000 for the last 3 years of the project. If your cost of capital is 11%, what is the NPV? IRR? Show Calculations.
Q3 A 50- year project has a cost of $500,000 and has annual cash flows of...
Q3 A 50- year project has a cost of $500,000 and has annual cash flows of $100,000 in years 1-25, and $200,000 in years 26-50. The company's required rate is 8%. Given this information, calculate the profitability index of the project. Question 3 options: 2.46 2.16 2.76 2.06 1.76
A 25-year project has a cost of $1,500,000 and has annual cash flows of $400,000 in...
A 25-year project has a cost of $1,500,000 and has annual cash flows of $400,000 in years 1-15, and $200,000 in years 16-25. The company's required rate is 14%. Given this information, calculate the payback of the project. 2.25 years 4.25 years 2.75 years 3.75 years 3.25 years
Project E requires an initial investment of $100,000 and the produces annual cash flows of $42,000...
Project E requires an initial investment of $100,000 and the produces annual cash flows of $42,000 per year for each of the next 3 years. Project L also requires an initial investment of $100,000 and produces cash flows of $35000 in year 1, $45,000 in year 2, and $75,000 in year 3. If the discount rate is 15% and the projects are mutually exclusive. a) Project L should be chosen b) Neither project is chosen c) Project E should be...
1)A 25- year project has a cost of $1,500,000 and has annual cash flows of $400,000...
1)A 25- year project has a cost of $1,500,000 and has annual cash flows of $400,000 in years 1-15, and $200,000 in years 16-25. The company's required rate is 14%. Given this information, calculate the profitability index of the project. Answer is 1.74 Can someone explain this with the steps?
The cash flows for the two projects are as follows? ($ million): Project Year 0 Year...
The cash flows for the two projects are as follows? ($ million): Project Year 0 Year 1 Year 2 Year 3 Year 4 A - $ 100 $26 $28 $42 $52 B -$ 100    $52 $42 $28    $18 a. What is the IRR of each? project? b. What is the NPV of each project at your cost of? capital? c. At what cost of capital are you indifferent between the two? projects? d. What should you? do?
a project with an initial cost of $73,600 is expected to generate annual cash flows of...
a project with an initial cost of $73,600 is expected to generate annual cash flows of $16,360 for the next 8 years. what is the projects internal rate of retu
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT