Question

In: Finance

Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 –$194,073...

Consider the following two mutually exclusive projects:
Year Cash Flow (A) Cash Flow (B)
0 –$194,073        –$16,205         
1 25,900        5,662         
2 53,000        8,227         
3 58,000        13,595         
4 406,000        9,462         

  

Whichever project you choose, if any, you require a 6 percent return on your investment.
Required:
(a) What is the payback period for Project A?
(Click to select)2.98 years3.3 years3.14 years3.05 years3.24 years

   

(b) What is the payback period for Project B?
(Click to select)2.28 years2.17 years2.06 years2.24 years2.11 years


(c) What is the discounted payback period for Project A?
(Click to select)3.39 years3.33 years3.07 years3.23 years3.13 years


(d) What is the discounted payback period for Project B?
(Click to select)2.24 years2.31 years2.43 years2.38 years2.19 years


(e) What is the NPV for Project A?
(Click to select)$240,384.16$260,209.66$255,253.28$247,818.72$235,427.78


(f) What is the NPV for Project B ?
(Click to select)$14,599.53$14,906.89$16,136.32$15,367.92$15,828.96

  

(g) What is the IRR for Project A?
(Click to select)36.75%33.95%35%33.25%36.05%
(h) What is the IRR for Project B?
(Click to select)36.86%39.9%36.1%39.14%38%


(i) What is the profitability index for Project A?
(Click to select)2.2092.3912.3452.2772.163


(j) What is the profitability index for Project B?

Solutions

Expert Solution


Related Solutions

Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 –$...
Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 –$ 364,000 –$ 52,000 1 46,000 25,000 2 68,000 22,000 3 68,000 21,500 4 458,000 17,500 Whichever project you choose, if any, you require a return of 11 percent on your investment. a-1. What is the payback period for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)    a-2. If you apply the payback criterion, which...
Consider the following two mutually exclusive projects:    Year Cash Flow (A) Cash Flow (B) 0...
Consider the following two mutually exclusive projects:    Year Cash Flow (A) Cash Flow (B) 0 –$199,124        –$15,993          1 25,800        5,691          2 51,000        8,855          3 54,000        13,391          4 416,000        8,695             Whichever project you choose, if any, you require a 6 percent return on your investment. a. What is the payback period for Project A?     b. What is the payback period for Project B? c. What is the discounted...
Consider the following two mutually exclusive projects:    Year Cash Flow (A) Cash Flow (B) 0...
Consider the following two mutually exclusive projects:    Year Cash Flow (A) Cash Flow (B) 0 –$ 360,000 –$ 45,000 1 35,000 23,000 2 55,000 21,000 3 55,000 18,500 4 430,000 13,600    Whichever project you choose, if any, you require a 14 percent return on your investment.    a-1 What is the payback period for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)    Payback period   Project A years     Project...
Consider the following two mutually exclusive projects:    Year Cash Flow (A) Cash Flow (B) 0...
Consider the following two mutually exclusive projects:    Year Cash Flow (A) Cash Flow (B) 0 –$260,730        –$15,011          1 27,800        4,942          2 56,000        8,023          3 55,000        13,040          4 426,000        9,138             Whichever project you choose, if any, you require a 6 percent return on your investment. a. What is the payback period for Project A?     b. What is the payback period for Project B? c. What is the discounted...
Consider the following two mutually exclusive projects:    Year Cash Flow (A) Cash Flow (B) 0...
Consider the following two mutually exclusive projects:    Year Cash Flow (A) Cash Flow (B) 0 –$251,835        –$15,247          1 25,100        4,828          2 55,000        8,358          3 50,000        13,472          4 385,000        8,102             Whichever project you choose, if any, you require a 6 percent return on your investment. a.What is the discounted payback period for Project A? b.What is the discounted payback period for Project B?
Consider the following two mutually exclusive projects:    Year Cash Flow (A) Cash Flow (B) 0...
Consider the following two mutually exclusive projects:    Year Cash Flow (A) Cash Flow (B) 0 –$251,835        –$15,247          1 25,100        4,828          2 55,000        8,358          3 50,000        13,472          4 385,000        8,102             Whichever project you choose, if any, you require a 6 percent return on your investment. a.What is the discounted payback period for Project A? b.What is the discounted payback period for Project B?
Consider the following two mutually exclusive projects:    Year Cash Flow (A) Cash Flow (B) 0...
Consider the following two mutually exclusive projects:    Year Cash Flow (A) Cash Flow (B) 0 –$216,888        –$15,026          1 26,900        4,016          2 51,000        8,270          3 54,000        13,423          4 420,000        9,668             Whichever project you choose, if any, you require a 6 percent return on your investment. a. What is the payback period for Project A?     b. What is the payback period for Project B? c. What is the discounted...
Consider the following two mutually exclusive projects:    Year Cash Flow (A) Cash Flow (B) 0...
Consider the following two mutually exclusive projects:    Year Cash Flow (A) Cash Flow (B) 0 –$ 345,000 –$ 48,500 1 50,000 24,500 2 70,000 22,500 3 70,000 20,000 4 445,000 15,100    Whichever project you choose, if any, you require a 14 percent return on your investment.    a-1 What is the payback period for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)    Payback period   Project A years     Project...
Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 –$...
Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 –$ 430,000 –$ 74,000 1 78,000 32,000 2 98,000 30,000 3 73,000 27,500 4 448,000 22,600 Whichever project you choose, if any, you require a 15% return on your investment. a-1. What is the payback period for each project? (Round the final answers to 2 decimal places.) Payback Period Project A years Project B years a-2. If you apply the payback criterion, which investment will...
Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 $...
Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 $ -450,000 $ -80,000 1 90,000 34,000 2 110,000 32,000 3 75,000 29,500 4 450,000 24,600 Whichever project you choose, if any, you require a 15% return on your investment. a-1. What is the payback period for each project? (Round the final answers to 2 decimal places.) Payback Period Project A years Project B years b-1. What is the discounted payback period for each project?...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT