Question

In: Finance

Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC)....

Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC). Both projects require an annual return of 17 percent.

Year Deepwater Fishing. New Submarine Ride

0 - $1,000,000 -1,950,000

1 420,000 1,000,000

2   550,000 850,000

3 470,000 850,000

a-1. Compute the IRR for both projects. (Do not round intermediate calculations and enter your answers are a percent rounded to 2 decimal places, e.g., 32.16.)

Deepwater Fishing _________ %

Submarine Ride __________%

a-2. Based on the IRR, which project should you choose? (Please choose the correct answer.)

Deepwater Fishing

Submarine Ride

b-1. Calculate the incremental IRR for the cash flows. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.).

Incremental IRR __________%

b-2. Based on the incremental IRR, which project should you choose?

Submarine Ride

Deepwater Fishing

c-1. Compute the NPV for both projects. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

Deepwater Fishing. _________

Submarine Ride. _________

c-2. Based on the NPC, which project should you choose? (Please choose the correct answer)

Submarine Ride

Deepwater Fishing

c-3. Is the NPC decision consistent with the incremental IRR rule? (Please choose the correct answer)

Yes

No

  

Solutions

Expert Solution


Related Solutions

Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC)....
Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC). Both projects require an annual return of 15%. Year Deepwater Fishing New Submarine Ride year0 -600,000 -1,800,000 year1 270,000 1,000,000 year2 350,000 700,000 year3 300,000 900,000 as a financial analyst for BRC, you are asked the following questions: a. Based on the discounted payback period rule, which project should be chosen? b. If your decision rule is to accept the project with the greater...
Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC)....
Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC). Both projects require an annual return of 15%. Year Deepwater Fishing New Submarine Ride 0 -600,000 -1,800,000 1 270,000 1,000,000 2 350,000 700,000 3 300,000 900,000 as a financial analyst for BRC, you are asked the following questions: a. Based on the discounted payback period rule, which project should be chosen? b. If your decision rule is to accept the project with the greater...
Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC)....
Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC). Both projects require an annual return of 15%. Year Deepwater Fishing New Submarine Ride 0 -600,000 -1,800,000 1 270,000 1,000,000 2 350,000 700,000 3 300,000 900,000 as a financial analyst for BRC, you are asked the following questions: a. Based on the discounted payback period rule, which project should be chosen? b. If your decision rule is to accept the project with the greater...
Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC)....
Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC). Both projects require an annual return of 15%. Deepwater fishing Year 0 -600,000 year 1 270,000 year 2 350,000 year 3 300,000 Fishing New Submarine Ride year 0 -1,800,000 year 1 1,000,000 year2 700,000 year3 900,000 as a financial analyst for BRC, you are asked the following questions: a. Based on the discounted payback period rule, which project should be chosen? b. If your...
Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC)....
Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC). Both projects require an annual return of 15%. Year Deepwater Fishing New Submarine Ride 0 -600,000 -1,800,000 1 270,000 1,000,000 2 350,000 700,000 3 300,000 900,000 as a financial analyst for BRC, you are asked the following questions: a. Based on the discounted payback period rule, which project should be chosen? b. If your decision rule is to accept the project with the greater...
Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC)....
Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC). Both projects require an annual return of 15%. Year Deepwater Fishing New Submarine Ride 0 -600,000 -1,800,000 1 270,000 1,000,000 2 350,000 700,000 3 300,000 900,000 as a financial analyst for BRC, you are asked the following questions: a. Based on the discounted payback period rule, which project should be chosen? b. If your decision rule is to accept the project with the greater...
Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC)....
Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC). Both projects require an annual return of 15%. Year Deepwater Fishing New Submarine Ride 0 -600,000 -1,800,000 1 270,000 1,000,000 2 350,000 700,000 3 300,000 900,000 as a financial analyst for BRC, you are asked the following questions: a. Based on the discounted payback period rule, which project should be chosen? b. If your decision rule is to accept the project with the greater...
Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC)....
Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC). Both projects require an annual return of 15%. Year Deepwater Fishing New Submarine Ride 0 -600,000 -1,800,000 1 270,000 1,000,000 2 350,000 700,000 3 300,000 900,000 as a financial analyst for BRC, you are asked the following questions: a. Based on the discounted payback period rule, which project should be chosen? b. If your decision rule is to accept the project with the greater...
Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC)....
Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC). Both projects require an annual return of 15%. Year Deepwater Fishing New Submarine Ride 0 -600,000 -1,800,000 1 270,000 1,000,000 2 350,000 700,000 3 300,000 900,000 as a financial analyst for BRC, you are asked the following questions: a. Based on the discounted payback period rule, which project should be chosen? b. If your decision rule is to accept the project with the greater...
Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC)....
Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC). Both projects require an annual return of 15%. Year Deepwater Fishing New Submarine Ride 0 -600,000 -1,800,000 1 270,000 1,000,000 2 350,000 700,000 3 300,000 900,000 as a financial analyst for BRC, you are asked the following questions: a. Based on the discounted payback period rule, which project should be chosen? b. If your decision rule is to accept the project with the greater...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT