Question
In: Finance
Two projects being considered are mutually exclusive and have the following cash flows: Year Project A...
- Two projects being considered are mutually exclusive and have the following cash flows:
|
Year |
Project A |
Project B |
|
0 |
-$50,000 |
-$50,000 |
|
1 |
15,000 |
0 |
|
2 |
15,000 |
0 |
|
3 |
15,000 |
0 |
|
4 |
15,000 |
0 |
|
5 |
15,000 |
90,000 |
1) Calculate NPV of each project if the required rate of return on these projects is 8 percent.
2) which would be chosen and why?
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Two mutually exclusive projects are being considered which have the following projected cash flows: &nbs
Two mutually exclusive projects are being considered which have
the following projected cash flows:
Year
Project
A
Project B
0
($50,000)
($50,000)
1
$15,625
$ 0
2
$16,000
$ 0
3
$15,000
$ 0
4
$16,000
$ 0
5
$15,500
$99,500
a. Calculate the NPV for each of these projects using a 10% rate
of return. Also, indicate which project should be chosen based on
the NPV...
Two projects being considered by a firm are mutually exclusive and have the following projected cash...
Two projects being considered by a firm are mutually exclusive
and have the following projected cash flows:
Year
Project A
Project B
0
($100,000)
($100,000)
1
39,500
0
2
39,500
0
3
39,500
133,000
Based only on the information
given, which of the two projects would be preferred, and why?
Project A, because it has an even cash inflow stream.
Project B, because it has a higher IRR.
Indifferent, because the projects have equal IRRs.
Include both in the capital...
Two projects being considered by a firm are mutually exclusive and have the following projected cash...
Two projects being considered by a firm are mutually exclusive
and have the following projected cash flows: Project A Project B
Year Cash Flow Cash Flow
Proj A Project B
0 -$300,000 -$300,000
1 145,500 $150,000
2 145,500 -$ 40,000
3 145,500 $370,000
The firm’s cost of capital is 10 percent. Based only on
the information given,
What are the NPV for Project A and B? Which project do you
choose based on the NPV?
What are the payback periods...
A company is considering two mutually exclusive projects that have the following cash flows: Year Project...
A company is considering two mutually exclusive projects that
have the following cash flows:
Year
Project A Cash
Flow
Project B Cash Flow
0
-$10,000
-$8,000
1
1000
7000
2
2000
1000
3
6000
1000
4
6000
1000
If the company’s required rate of return is 10%, find the
project’s NPV, IRR, PI, and payback period. Which project they
should invest in?
You've estimated the following cash flows (in $) for two mutually exclusive projects: Year Project A...
You've estimated the following cash flows (in $) for two
mutually exclusive projects:
Year
Project A
Project B
0
-5,200
-7,800
1
1,325
1,325
2
2,148
2,148
3
3,640
7,360
The required return for both projects is 8%.
1. What is the IRR for project A?
2. What is the IRR for project B?
3. Which project seems better according to the IRR method?
4. What is the NPV for project A?
5. What is the NPV for project B?...
You've estimated the following cash flows (in $) for two mutually exclusive projects: Year Project A...
You've estimated the
following cash flows (in $) for two mutually exclusive
projects:
Year
Project A
Project B
0
-5,700
-8,550
1
1,325
1,325
2
2,148
2,148
3
4,325
8,384
The required return
for both projects is 8%.
What is the IRR for
project A?
What is the IRR for
project B?
Which project seems
better according to the IRR method?
Project A
Project B
What is the NPV for project A?
What is the NPV for project B?
Which...
Consider the following cash flows on two mutually exclusive projects: Year Project A Project B 0...
Consider the following cash flows on two mutually exclusive
projects:
Year
Project A
Project B
0
–$
68,000
–$
83,000
1
48,000
47,000
2
43,000
56,000
3
38,000
59,000
The cash flows of Project A are expressed in real terms, whereas
those of Project B are expressed in nominal terms. The appropriate
nominal discount rate is 11 percent and the inflation rate is 5
percent. Calculate the NPV for each project. (Do not round
intermediate calculations and round your answers...
Mutually exclusive investments. The following are cash flows of two projects. Year Project A Project B 0...
Mutually exclusive investments.
The following are cash flows of two projects.
Year Project A Project B
0 $ (200) $ (200)
1 80 100
2 80 100
3 80 100
4 80
Calculate the NPV for both projects if the discount rate is
11%(Do not intermediate calculations.Round your answer to 2 decimal
places)
Suppose that you can only choose one of the these projects.
Which would you choose ?
project A
Project B
Neither
Two mutually exclusive projects have the following forecasted cash flows:
Two mutually exclusive projects have the following forecasted
cash flows:
Year A B
0 -20,000 -20,000
1 10,000 0
2 10,000 0
3 10,000 0
4 10,000 60,000
Compute the internal rate of return for each project.
Compute the NPV for each project if the required rate is
10%.
Which project should be accepted, and why?
Anderson Associates is considering two mutually exclusive projects that have the following cash flows: Project A...
Anderson Associates is considering two mutually exclusive
projects that have the following cash flows: Project A Project B
Year Cash Flow Cash Flow 0 -$10,000 -$8,000 1 4,000 7,000 2 2,000
3,000 3 6,000 1,000 4 8,000 3,000 At what cost of capital do the
two projects have the same net present value? (That is, what is the
crossover rate?) Enter your answer rounded to two decimal places.
Do not enter % in the answer box. For example, if your...
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