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All techniques, conflicting rankings Nicholson Roofing Materials, Inc., is considering two mutually exclusive projects, each with...
All techniques, conflicting rankings Nicholson Roofing Materials, Inc., is considering two mutually exclusive projects, each with an initial investment of $130 comma 000. The company's board of directors has set a 4-year payback requirement and has set its cost of capital at 8%. The cash inflows associated with the two projects are shown in the following table: LOADING.... a. Calculate the payback period for each project. Rank the projects by payback period. b. Calculate the NPV of each project. Rank the project by NPV. c. Calculate the IRR of each project. Rank the project by IRR. d. Make a recommendation.
| 1 | $45,000 | $65,000 | |
| 2 | $45,000 | $50,000 | |
| 3 | $45,000 | $30,000 | |
| 4 | $45,000 | $30,000 | |
| 5 | $45,000 | $30,000 | |
| 6 | $45,000 | $30,000 |
Solutions
jeff jeffy answered 1 year agoRelated Solutions
P10-21 (similar to) All techniques, conflicting rankings Nicholson Roofing Materials, Inc., is considering two mutually exclusive...
P10-21 (similar to)
All techniques, conflicting rankings Nicholson Roofing
Materials, Inc., is considering two mutually exclusive projects,
each with an initial investment of
$150,000.
The company's board of directors has set a 4-year payback
requirement and has set its cost of capital at
7%.
The cash inflows associated with the two projects are shown in
the following table:
LOADING...
.
a. Calculate the payback period for each project. Rank the
projects by payback period.
b. Calculate the NPV of each...
MY QUESTION IS POSTED BELOW. All techniques, conflicting rankings: Nicholson Roofing Materials, Inc., is considering two...
MY QUESTION IS POSTED BELOW.
All techniques, conflicting rankings: Nicholson Roofing
Materials, Inc., is considering two mutually exclusive projects,
each with an initial investment of $120,000. The company's board
of directors has set a 4-year payback requirement and has set its
cost of capital at 11%. The cash inflows associated with the two
projects are shown in the following table: attached....
a. Calculate the payback period for each project. Rank the
projects by payback period.
b. Calculate the NPV of...
Swee Rien Roofing Materials, Inc., is considering two mutually exclusive projects, each with an initial investment...
Swee Rien Roofing Materials, Inc., is considering two mutually
exclusive projects, each with an initial investment of RM1,500,000.
The company’s board of directors has set a maximum 4-year payback
requirement and has set its cost of capital at 9.50 percent. The
cash inflows associated with the two projects are shown in the
following table.
Cash inflows (CFt)
Year
Project A (RM)
Project B (RM)
1
450,000
750,000
2
450,000
600,000
3
550,000
300,000
4
400,000
350,000
5
450,000
250,000
6...
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. ...
A firm is considering two mutually exclusive projects, A and B. The projects are different in...
A firm is considering two mutually exclusive projects, A and B.
The projects are different in that they have different returns
depending on general economic conditions. The firm forecasts that
return on the market, and the returns on each project, along with
their associated probabilities will be given by the following
table. You can assume a 5% risk free rate and a 6% market risk
premium. Assume the CAPM holds. Compare the expected returns to the
cost of capital for...
The All-Mine Corporation is considering whether to invest in two mutually exclusive projects. Both projects cost...
The All-Mine Corporation is considering whether to invest in two
mutually exclusive projects. Both projects cost $100,000. Project A
will generate expected cash flow $250,000 in good economy, and
$2,500 in bad economy. Project B will generate expected cash flow
$300,000 in good economy, but loss $300,000 in bad economy. Each
economic outcome is equally likely.
a) If All-Mine is an all-equity firm, which project should the
company choose? What is the incremental value with Project A or B
respectively?...
The All-Mine Corporation is considering whether to invest in two mutually exclusive projects. Both projects cost...
The All-Mine Corporation is considering whether to invest in
two mutually
exclusive projects. Both projects cost $100,000. Project A
will generate expected cash flow
$250,000 in good economy, and $2,500 in bad economy. Project B
will generate expected
cash flow $300,000 in good economy, but loss $300,000 in bad
economy. Each economic
outcome is equally likely.
a) If All-Mine is an all-equity firm, which project should the
company choose? What is
the incremental value with Project A or B respectively?...
The All-Mine Corporation is considering whether to invest in two mutually exclusive projects. Both projects cost...
The All-Mine Corporation is considering whether to invest in
two mutually
exclusive projects. Both projects cost $100,000. Project A
will generate expected cash flow
$250,000 in good economy, and $2,500 in bad economy. Project B
will generate expected
cash flow $300,000 in good economy, but loss $300,000 in bad
economy. Each economic
outcome is equally likely.
a) If All-Mine is an all-equity firm, which project should the
company choose? What is
the incremental value with Project A or B respectively?...
Your firm is considering two projects that are mutually exclusive. Each project will require an initial...
Your firm is considering two projects that are mutually
exclusive. Each project will require an initial outlay of $200,000.
The forecast yearly cash flows are shown below. Time Project A
Project B 0 -200,000 -200,000 1 -25,000 120,000 2 80,000 80,000 3
100,000 40,000 4 140,000 25,000
a) Calculate the payback period (undiscounted) of each project.
Include fractional periods (e.g., x.xx years) in your response, if
applicable. b) Calculate the IRR of each project. c) Calculate the
Modified IRR (MIRR)...
You are considering the following two mutually exclusive projects. The required return on each project is...
You are considering the following two mutually exclusive
projects. The required return on each project is 14 percent. Which
project should you accept and what is the best reason for that
decision?
Year
Project A
Project B
0
−$
24,000
−$
21,000
1
9,500
6,500
2
16,200
9,800
3
8,700
15,200
Project A; because it pays back faster
Project A; because it has the higher profitability index
Incorrect
Project B; because it has the higher profitability index
Project B; because...
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