Question
In: Finance
All projects (A to G) are 7-year projects. NPV = Net present value. IRR = internal...
All projects (A to G) are 7-year projects. NPV = Net present value. IRR = internal rate of return. MIRR = modified internal rate of return. PI = profitability index.
| Project A | Project B | Project C | Project D | Project E | Project F | Project G | |
| NPV= | $4,711 | ($711) | ($657) | $334 | $9,842 | $7,360 | ($3,224) |
| IRR= | 44.51% | 5.47% | 8.06% | 12.98% | 22.56% | 17.19% | 5.47% |
| MIRR= | 25.23% | 7.50% | 8.97% | 11.57% | 16.26% | 13.70% | 7.50% |
| PI= | 2.178 | 0.822 | 0.945 | 1.028 | 1.394 | 1.294 | 0.871 |
Which of the following statements are true (Consider each statement on its own separate from the others listed)
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If projects A & B are mutually exclusive, projects C and D are also mutually exclusive and projects F and G are also mutually exclusive (all others are independent), under the MIRR rule all projects should be undertaken |
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If all projects are independent, under the IRR rule, projects B, C and G should be rejected |
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If projects A & D are mutually exclusive, projects B and C are also mutually exclusive and projects E and F are also mutually exclusive (all others are independent), under the IRR rule projects A, C, and E should be undertaken |
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If all projects are mutually exclusive, under the MIRR rule projects A, D, E and F should be taken |
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If only projects B and C are mutually exclusive, under the NPV rule only project E should be taken |
Solutions
jeff jeffy answered 1 year agoRelated Solutions
All projects (A to G) are 7-year projects. NPV = Net present value. IRR = internal...
All projects (A to G) are 7-year projects. NPV = Net present
value. IRR = internal rate of return. MIRR = modified internal rate
of return. PI = profitability index.
Criteria: Project_A Project_B
Project_C Project_D
Project_E Project_F
Project_G
NPV= $137,083 $31,290 $6,016
$7,647 ($584) $12,521
$9,214
IRR= 31.80% 48.34% 12.03%
11.30% 9.94% 26.79%
37.87%
MIRR= 18.52% 23.52%...
All projects (A to G) are 7-year projects. NPV = Net present value. IRR = internal...
All projects (A to G) are 7-year projects. NPV = Net present
value. IRR = internal rate of return. MIRR = modified internal rate
of return. PI = profitability index.
Criteria
Project_A
Project_B
Project_C
Project_D
Project_E
Project_F
Project_G
NPV=
$14,154
$77,992
$29,515
$11,564
($8,849)
$26,514
$30,022
IRR=
28.66%
20.33%
19.72%
45.52%
9.03%
16.40%
16.05%
MIRR=
17.28%
14.35%
12.86%
22.76%
9.53%
11.97%
12.45%
PI=
1.57
1.31
1.20
2.16
0.97
1.13
1.17
The cost of capital (r) is 10%.
Which of the...
All projects (A to G) are 7-year projects. NPV = Net present value. IRR = internal...
All projects (A to G) are 7-year projects. NPV = Net present
value. IRR = internal rate of return. MIRR = modified internal rate
of return. PI = profitability index. Criteria: Project_A Project_B
Project_C Project_D Project_E Project_F Project_G NPV= $137,083
$36,290 $6,016 $7,647 ($584) $14,521 $8,214 IRR= 31.80% 48.34%
12.03% 11.30% 9.94% 26.79% 37.87% MIRR= 18.52% 23.52% 10.62% 10.59%
9.97% 23.53% 20.76% PI= 1.69 2.25 1.040 1.038 0.999 2.28 1.92 The
discounting rate (r) is 10%. Which of the following...
3. Understanding the IRR and NPV The net present value (NPV) and internal rate of return...
3. Understanding the IRR and NPV
The net present value (NPV) and internal rate of return (IRR)
methods of investment analysis are interrelated and are sometimes
used together to make capital budgeting decisions.
Consider the case of Cute Camel Woodcraft Company:
Last Tuesday, Cute Camel Woodcraft Company lost a portion of its
planning and financial data when both its main and its backup
servers crashed. The company’s CFO remembers that the internal rate
of return (IRR) of Project Gamma is...
3. Understanding the IRR and NPV The net present value (NPV) and internal rate of return...
3. Understanding the IRR and NPV
The net present value (NPV) and internal rate of return (IRR)
methods of investment analysis are interrelated and are sometimes
used together to make capital budgeting decisions.
Consider the case of Blue Hamster Manufacturing Inc.:
Last Tuesday, Blue Hamster Manufacturing Inc. lost a portion of
its planning and financial data when both its main and its backup
servers crashed. The company’s CFO remembers that the internal rate
of return (IRR) of Project Delta is...
3. Understanding the IRR and NPV The net present value (NPV) and internal rate of return...
3. Understanding the IRR and NPV
The net present value (NPV) and internal rate of return (IRR)
methods of investment analysis are interrelated and are sometimes
used together to make capital budgeting decisions.
Consider the case of Cold Goose Metal Works Inc.:
Last Tuesday, Cold Goose Metal Works Inc. lost a portion of its
planning and financial data when both its main and its backup
servers crashed. The company’s CFO remembers that the internal rate
of return (IRR) of Project...
The net present value (NPV) and internal rate of return (IRR) methods of investment analysis are...
The net present value (NPV) and internal rate of return (IRR)
methods of investment analysis are interrelated and are sometimes
used together to make capital budgeting decisions.
Consider the case of Cold Goose Metal Works Inc.:
Last Tuesday, Cold Goose Metal Works Inc. lost a portion of its
planning and financial data when both its main and its backup
servers crashed. The company’s CFO remembers that the internal rate
of return (IRR) of Project Omicron is 13.2%, but he can’t...
Describe the use of internal rate of return (IRR), net present value (NPV), and the payback...
Describe the use of internal rate of return (IRR), net present
value (NPV), and the payback method in evaluating project cash
flows.
Use both the NET present value (NPV) and the Internal Rate of return (IRR) to assess...
Use both the NET present value (NPV) and the Internal Rate of
return (IRR) to assess and draw conclusions when advising a company
which is wondering whether to K18 000 on an item of equipment in
order to obtain cash profits as shown below
Year
K
1
6000
2
8000
3
5000
4
1000
Note: The company requires a return of 10% per annum.
1 (b) Compare the merits of the net present value (NPV), internal rate of return (IRR)...
1 (b) Compare the merits of the net present value (NPV),
internal rate of return (IRR) and discounted payback period methods
of capital investment project appraisal, assuming the firm’s
objective is to maximise the wealth of its equityholders. What
conditions must apply for the net present value (NPV) and internal
rate of return (IRR) methods to always give the same signal to
accept or reject a capital investment project? (210 words)
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