Question
In: Finance
Better Health, Inc. is evaluating two investment projects, which require up-front expenditures of $1.0 and 1.2...
Better Health, Inc. is evaluating two investment projects, which require up-front expenditures of $1.0 and 1.2 million, respectively. The projects are expected to produce the following net cash inflows.
| Year | Project A | Project B |
| 0 | -$1,000,000 | -$1,200,000 |
| 1 | $500,000 | $800,000 |
| 2 | $400,000 | $600,000 |
| 3 | $350,000 | $300,000 |
a. What is each project's IRR?
b. What is each project's NPV if the cost of capital is 10 percent?
c. Which project is more beneficial to Better Health?
Please show your work.
Solutions
jeff jeffy answered 1 year agoRelated Solutions
14.2 Better Health, Inc is a evaluating two investment projects, each of which requires an up-front...
14.2 Better Health, Inc is a evaluating two investment projects,
each of which requires an up-front expenditure of $1.5 million. The
projects are expected to produce the following net cash inflows:
Project A Project B Year $500,000 $2,000,00 1 1,000,000 1,000,000 2
2,000,000 600,000 3 ($1,500,000) a. What is each project's IRR? b.
What is each project's NPV if the cost of capital is 10 percent? 5
percent? 15 percent?
Better Health, Inc. is evaluating two investment projects, each of which requires an up-front expenditure of...
Better Health, Inc. is evaluating two investment projects, each
of which requires an up-front expenditure of $2.5 million. The
projects are expected to produce the following net cash
inflows:
Year
Project A
Project B
0
-$2,500,000
-$2,500,000
1
$500,000
$1,200,000
2
$1,100,000
$1,300,000
3
$1,400,000
$800,000
a. What is each project's IRR?
b. What is each project's NPV if the cost of capital is 10
percent?
c. Which one would you buy?
Please include the input used in a financial...
Better Health, Inc. is evaluating two investment projects, each of which requires an up-front expenditure of...
Better Health, Inc. is evaluating two investment projects, each
of which requires an up-front expenditure of $2.5 million. The
projects are expected to produce the following net cash inflows:
Year Project A Project B 1 750,000 2,000,000 2 1,250,000 1,250,000
3 2,000,000 750,000 a. What is each project's IRR? Project A =
IRR(C11: b. What is each project's NPV if the cost of capital is
10%?
Attention Chegg Tutor: There is a similar answer online
in Chegg, but the excel...
Better Health Inc. is evaluating two capital investments, each of which requires an up-front (year 0)...
Better Health Inc. is evaluating two capital investments, each
of which requires an up-front (year 0) expenditure of $1.5 million.
The projects are expected to produce the following net cash
inflows:
a. What is each project's IRR?
b. What is each project's NPV if the opportunity cost of capital
is 10 percent? 5 percent? and 15 percent?
Year
Project A
Project B
1
$500,000
$,2000,000
2
1,000,000
1,000,000
3
2,000,000
600,000
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You are evaluating to make an investment in a small biotech
start-up which will require an investment of $1.4 million. The
start-up is expecting to generate free cash flows of $200,000
during the first year.After one year, the insurance companies will decide if the
start-up’s drug will be cover in their plans or not. If they decide
to not cover the drug, the company will be able to generate free
cash flows of $400,000 during the next 12 years (the...
Your division is considering two investment projects, each of which requires an up-front expenditure of $17...
Your division is considering two investment projects, each of
which requires an up-front expenditure of $17 million. You estimate
that the investments will produce the following net cash flows:
Year
Project A
Project B
1
$ 5,000,000
$20,000,000
2
10,000,000
10,000,000
3
20,000,000
6,000,000
What are the two projects' net present values, assuming the cost
of capital is 5%, 10% and 15%?
What are the two projects' IRRs at these same costs of
capital?
Your division is considering two investment projects, each of which requires an up-front expenditure of $17...
Your division is considering two investment projects, each of
which requires an up-front expenditure of $17 million. You estimate
that the investments will produce the following net cash flows:
Year
Project A
Project B
1
$ 5,000,000
$20,000,000
2
10,000,000
10,000,000
3
20,000,000
6,000,000
What are the two projects' net present values, assuming the cost
of capital is 5%? Do not round intermediate calculations. Round
your answers to the nearest dollar.
Project A: $
Project B: $
What are the two...
NPV Your division is considering two investment projects, each of which requires an up-front expenditure of...
NPV
Your division is considering two investment projects, each of
which requires an up-front expenditure of $15 million. You estimate
that the investments will produce the following net cash flows:
Year
Project A
Project B
1
$ 5,000,000
$20,000,000
2
10,000,000
10,000,000
3
20,000,000
6,000,000
What are the two projects' net present values, assuming the cost
of capital is 5%? Do not round intermediate calculations. Round
your answers to the nearest dollar.
Project A: $
Project B: $
What are the...
Your division is considering two investment projects, each of which requires an up-front expenditure of $24...
Your division is considering two investment projects, each of
which requires an up-front expenditure of $24 million. You estimate
that the cost of capital is 11% and that the investments will
produce the following after-tax cash flows (in millions of
dollars):
Year Project A Project B
1 5 20
2 10 10
3 15 8
4 20 6
What is the regular payback period for each of the projects?
Round your answers to two decimal places.
Project A
Project B...
Your division is considering two investment projects, each of which requires an up-front expenditure of $20...
Your division is considering two investment projects, each of
which requires an up-front expenditure of $20 million. You estimate
that the investments will produce the following net cash flows:
Year Project A Project B
1 $4,500,000 $20,000,000
2 10,000,000 10,000,000
3 20.000.000 6,500,000
What are the two project’s NPVs assuming the cost of capital is
3%, 12%, 17%?
What are the two projects’ IRRs at those same costs of
capital?
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