All techniques - Decision among mutually exclusive investments. Pound Industries is attempting to select the best...

All techniques - Decision among mutually exclusive investments. Pound Industries is attempting to select the best of three mutually exclusive projects. The initial investment and after-tax cash inflows associated with these projects are shown in the following table:

Cash flows	Project A	Project B	Project C
Initial investment (CF)	$90,000	$130,000	$120,000
Cash inflows (CF),t=1 to 5	$30,000	$41,000	$41,500

a. calculate the payback period for each project.

b. calculate the net present value (NPV) of each project, assuming that the firm has a cost of capital equal to 12%.

c. calculate the internal rate of return (IRR) for each project.

d. indicate which project you would recommend.

Expert Solution

NOTE: The answer to your question has been given below/above. If there is any query regarding the answer, please ask in the comment section. If you find the answer helpful, do upvote. Help us help you.

jeff jeffy answered 1 year ago

P10–24 All techniques: Decision among mutually exclusive investments Pound Industries is attempting to select the best of...

P10–24 All techniques: Decision among mutually exclusive investments Pound Industries is attempting to select the best of three mutually exclusive projects. The initial investment and after-tax cash inflows associated with these projects are shown in the following table. Cash flows Project A Project B Project C Initial investment (CF0) −$60,000 −$100,000 −$110,000 Cash inflows (CFt), t = 1 to 5 20,000 31,500 32,500 Calculate the net present value (NPV) of each project, assuming that the firm has a cost of capital...

All techniqueslong dash—Decision among mutually exclusive investments???Pound Industries is attempting to select the best of three...

All techniqueslong dash—Decision among mutually exclusive investments???Pound Industries is attempting to select the best of three mutually exclusive projects. The initial investment and? after-tax cash inflows associated with these projects are shown in the following table. Cash flows Project A Project B Project C Initial investment? (CF) ?$60 comma 00060,000 ?$100 comma 000100,000 ?$100 comma 000100,000 Cash inflows? (CF), tequals=1 to 5 ?$20 comma 00020,000 ?$31 comma 00031,000 ?$31 comma 50031,500 a.??Calculate the payback period for each project. b.??Calculate the...

among mutually exclusive investments Pound Industries is attempting to select the best of three mutually exclusive...

among mutually exclusive investments Pound Industries is attempting to select the best of three mutually exclusive projects. The initial investment and after-tax cash inflows associated with these projects are shown in the following table. Cash flows Project A Project B Project C Initial investment (CF) $120 comma 000120,000 $170 comma 000170,000 $170 comma 000170,000 Cash inflows (CF), tequals=1 to 5 $40 comma 00040,000 $51 comma 50051,500 $53 comma 00053,000 a. Calculate the payback period for each project. b. Calculate the...

P10-24 (similar to) All techniqueslong dash—Decision among mutually exclusive investments Pound Industries is attempting to select...

P10-24 (similar to) All techniqueslong dash—Decision among mutually exclusive investments Pound Industries is attempting to select the best of three mutually exclusive projects. The initial investment and after-tax cash inflows associated with these projects are shown in the following table. Cash flows Project A Project B Project C Initial investment (CF) $150,000 $190,000 $190,000 Cash inflows Initial investment (CF), cash inflows (cf),t=1to 5 $50,000 $62,000 $63,000 a. Calculate the payback period for each project. b. Calculate the net present value...

Pound Industries is attempting to select the best of three mutually exclusive projects. The initial investment...

Pound Industries is attempting to select the best of three mutually exclusive projects. The initial investment and after-tax cash inflows associated with these projects are shown in the following table. Cash flows Project A Project B Project C Initial investment (CF) $140,000 $170,000 $170,000 Cash Flows (CF) T= 1 to 15 $45,000 $56,500 57,000 a. Calculate the payback period for each project. b. Calculate the net present value (NPV) of each project, assuming that the...

Risk classes and RADR Moses Manufacturing is attempting to select the best of three mutually exclusive...

Risk classes and RADR Moses Manufacturing is attempting to select the best of three mutually exclusive projects, X, Y, and Z. Although all the projects have 55-year lives, they possess differing degrees of risk. Project X is in classV, the highest-risk class; project Y is in class II, the below-average-risk class; and project Z is in class III, the average-risk class. The basic cash flow data for each project and the risk classes and risk-adjusted discount rates (RADRs) used by...

6. The Mosco Manufacture is attempting to select the best three mutually exclusive projects, X, Y,...

6. The Mosco Manufacture is attempting to select the best three mutually exclusive projects, X, Y, and Z. Although all the projects have 5-year lives, they possess differing degrees of risk. Project X is in class of the highest risk class; project Y is the below-average-risk class; project Z is in class of the average-risk class. The basic cash flow data for each project are in follow table and the risk classes and risk-adjusted discount rate (RADR) used by the...

Q1. (CLO3) All techniques with NPV profile—Mutually exclusive projects Fitch Industries is in the process of...

Q1. (CLO3) All techniques with NPV profile—Mutually exclusive projects Fitch Industries is in the process of choosing the better of two equal-risk, mutually exclusive capital expenditure projects—M and N. The relevant cash flows for each project are shown in the following table. The firm’s cost of capital is 14%. Project M Project N Initial investment $28,500 $27,000 1 $10,000 $11,000 2 $10,000 $10,000 3 $10,000 9,000 4 $10,000 8,000 a. Calculate each project’s payback period. b. Calculate the net present...

IRRlong dash—Mutually exclusive projects Bell Manufacturing is attempting to choose the better of two mutually exclusive...

IRRlong dash—Mutually exclusive projects Bell Manufacturing is attempting to choose the better of two mutually exclusive projects for expanding the firm's warehouse capacity. The relevant cash flows for the projects are shown in the following table: LOADING... . The firm's cost of capital is 1313 %. a. Calculate the IRR for each of the projects. Assess the acceptability of each project on the basis of the IRRs. b. Which project is preferred? Project X Project Y Initial investment (CF 0CF0)...

All techniques with NPV profile Mutually exclusive projects Projects A and B, of equal risk, are...

All techniques with NPV profile Mutually exclusive projects Projects A and B, of equal risk, are alternatives for expanding Rosa Company's capacity. The firm's cost of capital is 16%. The cash flows for each project are shown in the following table: Initial investment $130,000 $100,000 Year Cash inflows 1 $30,000 $30,000 2 $35,000 $30,000 3 $40,000 $30,000 4 $45,000 $30,000 5 $50,000 $30,000 a. Calculate each project's payback period. b. Calculate the net present value (NPV) for each project. c. ...

Question