Question
In: Finance
Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 -$350,000...
Consider the following two mutually exclusive projects:
|
Year |
Cash Flow (A) |
Cash Flow (B) |
|
0 |
-$350,000 |
-$50,000 |
|
1 |
45,000 |
24,000 |
|
2 |
65,000 |
22,000 |
|
3 |
65,000 |
19,500 |
|
4 |
440,000 |
14,600 |
Whichever project you choose, if any, you require a 15 percent return on your investment.
1. If you apply the payback criterion, which investment will you choose? Why?
2. If you apply the discounted payback criterion, which investment will you choose? Why?
3. If you apply the NPV criterion, which investment will you choose? Why?
4. If you apply the IRR criterion, which investment will you choose? Why?
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Consider the following two mutually exclusive projects Year Cash flow (a) Cash Flow (b) 0 -350,000...
Consider the following two mutually exclusive projects
Year
Cash flow (a)
Cash Flow (b)
0
-350,000
-50,000
1
45,000
24,000
2
65,000
22,000
2
65,000
19,500
4
440,000
14,600
In excel create an NPV profile graph for the 2 projects
Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 -$350,000...
Consider the following two mutually exclusive projects: Year
Cash Flow (A) Cash Flow (B) 0 -$350,000 -$50,000 1 45,000 24,000 2
65,000 22,000 3 65,000 19,500 4 440,000 14,600 Whichever project
you choose, if any, you require a 15 percent return on your
investment. 1. If you apply the NPV criterion, which investment
will you choose? Why? 2. If you apply the IRR criterion, which
investment will you choose? Why? 3. If you apply the payback
criterion, which investment will...
Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 –$350,000...
Consider the following two mutually exclusive projects:
Year
Cash Flow (A)
Cash Flow (B)
0
–$350,000
–$35,000
1
25,000
19,000
2
70,000
11,000
3
70,000
19,000
4
410,000
11,000
The required return on these investments is 12 percent.
Required:
(a)
What is the payback period for each project?
(Do not round intermediate
calculations. Round your answers to 2 decimal
places (e.g., 32.16).)
Payback period
Project A
years
Project B
years ...
Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 –$...
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...
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