Question
In: Finance
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?
6. Which project seems better according to the NPV method?
7. Compare the answers to parts 3 and 6. If both projects are mutually exclusive, which one should you accept?
Solutions
jeff jeffy answered 1 year agoRelated Solutions
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...
You've estimated the following cash flows (in $ million) for two mutually exclusive projects: Year Project...
You've estimated the
following cash flows (in $ million) for two mutually exclusive
projects:
Year
Project A
Project B
0
-29
-45
1
30
45
2
40
50
3
50
50
The appropriate
discount rate is 9%.
Part 1
What is the NPV of
project A (in $ million)?
Part 2
What is the NPV of
project B (in $ million)?
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
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
67000
82000
1
47000
46000
2
42000
55000
3
37000
58000
The cash flows of Project A are expressed in real terms while
those of Project B are expressed in nominal terms. The appropriate
nominal discount rate is 10 percent and the inflation rate is 2
percent.
Calculate the NPV for each project. (Do not round
intermediate calculations and round your answers to...
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?
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
-$8,000
1
1000
7000
2
2000
1000
3
6000
1000
4
6000
1000
If the company’s required rate of return is 10%, find the
project’s NPV, IRR, PI, and payback period. Which project they
should invest in?
Consider the following two mutually exclusive projects and their Cash Flows ($)
Consider the following two mutually exclusive projects and their
Cash Flows ($)Project
C0 C1 C2
C3K
–$100
+$45 +$45 +$60 W
–$150
+$45 +$45 +$125Which statement is correct based on the above information about
Projects K and W?a. If the discount rate is 7.5%, accept project W because the
cross-over rate is 9%b. Accept project K, because at a 9% discount rate K and W have
the same net present value.c. If the discount rate is 9.5%, reject project K, because the...
Here are the cash-flow forecasts for two mutually exclusive projects: Cash Flows (dollars) Year Project A...
Here are the cash-flow forecasts for two mutually exclusive
projects: Cash Flows (dollars) Year Project A Project B 0 ? 120 ?
120 1 50 69 2 70 69 3 90 69 a-1. What is the NPV of each project if
the opportunity cost of capital is 2%? (Do not round intermediate
calculations. Round your answers to 2 decimal places.) b-1. What is
the NPV of each project if the opportunity cost of capital is 14%?
(Do not round intermediate...
Your firm has estimated the following cash flows for two mutually exclusive capital investment projects. The...
Your firm has estimated the following cash flows for two
mutually exclusive capital investment projects. The firm's required
rate of return is 13%. Use this information for the next 3
questions.
Year Project A Cash Flow Project B Cash
Flow
0 -$100,000 -$100,000
1 28,900 48,000
2 28,900 40,000
3 28,900 40,000
4 28,900
5 28,900
Which of the following statements best describes projects A and
B?
a) Project A should be accepted because it has the highest
NPV.
b)...
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