Question
In: Finance
Consider two mutually exclusive projects X and Y with identical initial outlays of $500,000 and useful...
- Consider two mutually exclusive projects X and Y with identical
initial outlays of $500,000 and useful lives of 5 years. Project X
is expected to produce an after-tax cash flow of $150,000 each
year. Project Y is expected to generate a single after-tax net cash
flow of $1,015,000 in year 5. The discount rate is 15 percent.
- Calculate the net present value for each project.
- Calculate the IRR for each project.
- What decision should you make regarding these projects?
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Short Answer questions: Consider two mutually exclusive projects X and Y with identical initial outlays of...
Short Answer questions: Consider two mutually exclusive projects
X and Y with identical initial outlays of $600,000 and useful lives
of 5 years. Project X is expected to produce an after-tax cash flow
of $180,000 each year. Project Y is expected to generate a single
after-tax net cash flow of $1,015,000 in year 5. The discount rate
is 14 percent.
Calculate Net Present Value for each project
Calculate IRR for each project
What should you decide based on the two...
Consider the following two mutually exclusive projects X and Y: X Y Year 0 -$5,500 -$4,500...
Consider the following two mutually exclusive projects X and
Y:
X
Y
Year 0
-$5,500
-$4,500
Year 1
$3,000
$2,800
Year 2
$2,000
$2,000
Year 3
$2,000
$1,000
Year 4
$1,000
$1,000
What is the crossover rate for these two projects?
Sketch the NPV profiles for X and Y (point out the IRR of each
project and the crossover rate in the NPV profiles).
The required return is 10%. Which project should be
chosen?
Consider the following two mutually exclusive projects: Year Cash Flow (X) Cash Flow (Y) 0...
Consider the following two
mutually exclusive projects:
Year
Cash Flow
(X)
Cash Flow
(Y)
0
–$
19,400
–$
19,400
1
8,700
9,800
2
8,800
7,650
3
8,650
8,550
Calculate the IRR for each project. (Do not round
intermediate calculations. Enter your answers as a percent rounded
to 2 decimal places, e.g., 32.16.)
IRR
Project X
%
Project Y
%
What is the crossover rate for these two projects? (Do
not round intermediate calculations. Enter your answer...
Consider the following two mutually exclusive projects: Year Cash Flow (X) Cash Flow (Y) 0 –$...
Consider the following two mutually exclusive projects:
Year
Cash Flow (X)
Cash Flow (Y)
0
–$
23,000
–$
23,000
1
10,490
12,000
2
10,900
9,360
3
10,500
10,400
Calculate the IRR for each project. (Do not round
intermediate calculations and enter your answers as a percent
rounded to 2 decimal places, e.g., 32.16.)
What is the crossover rate for these two projects? (Do
not round intermediate calculations and enter your answer as a
percent rounded to 2 decimal places, e.g.,...
Consider the following two mutually exclusive projects: Year Cash Flow (X) Cash Flow (Y) 0 –$...
Consider the following two mutually exclusive projects:
Year
Cash Flow
(X)
Cash Flow
(Y)
0
–$
20,900
–$
20,900
1
9,075
10,550
2
9,550
8,025
3
9,025
8,925
A) Calculate the IRR for each project
B)
What is the crossover rate for these two projects?
C) What is the NPV of Projects X and Y at discount rates of 0
percent, 15 percent, and 25 percent?
A firm is considering two mutually exclusive projects, X and Y, with the following cash flows:...
A firm is considering two mutually exclusive projects, X and Y,
with the following cash flows: 0 1 2 3 4 Project X -$1,000 $110
$300 $400 $700 Project Y -$1,000 $900 $100 $55 $45 The projects are
equally risky, and their WACC is 10%. What is the MIRR of the
project that maximizes shareholder value? Round your answer to two
decimal places. Do not round your intermediate calculations.
A firm is considering two mutually exclusive projects, X and Y, with the following cash flows:...
A firm is considering two mutually exclusive projects, X and Y,
with the following cash flows:
0
1
2
3
4
Project X
-$1,000
$100
$300
$400
$650
Project Y
-$1,000
$1,000
$110
$45
$55
The projects are equally risky, and their WACC is 10%. What is
the MIRR of the project that maximizes shareholder value? Do not
round intermediate calculations. Round your answer to two decimal
places.
%_____
A firm is considering two mutually exclusive projects, X and Y, with the following cash flows:...
A firm is considering two mutually exclusive projects, X and Y,
with the following cash flows: 0 1 2 3 4 Project X -$1,000 $110
$280 $400 $700 Project Y -$1,000 $1,100 $110 $45 $50 The projects
are equally risky, and their WACC is 11%. What is the MIRR of the
project that maximizes shareholder value? Round your answer to two
decimal places. Do not round your intermediate calculations.
A firm is considering two mutually exclusive projects, X and Y, with the following cash flows:...
A firm is considering two mutually exclusive projects, X and Y,
with the following cash flows:
0
1
2
3
4
Project X
-$1,000
$110
$320
$400
$750
Project Y
-$1,000
$1,000
$90
$45
$50
The projects are equally risky, and their WACC is 11%. What is
the MIRR of the project that maximizes shareholder value? Do not
round intermediate calculations. Round your answer to two decimal
places
A firm is considering two mutually exclusive projects, X and Y, with the following cash flows:...
A firm is considering two mutually exclusive projects, X and Y,
with the following cash flows:
0
1
2
3
4
Project X
-$1,000
$90
$300
$370
$650
Project Y
-$1,000
$900
$100
$50
$45
The projects are equally risky, and their WACC is 10%. What is
the MIRR of the project that maximizes shareholder value? Round
your answer to two decimal places. Do not round your intermediate
calculations.
____%
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