Question
In: Finance
Suppose that you have two mutually exclusive projects. A and B. Project A has cash flows...
Suppose that you have two mutually exclusive projects. A and B. Project A has cash flows of CF0, CF1, CF2, CF3, CF4, CF5. (Years 0-5). Project B has cash flow of CF0, CF1, CF2, CF3. The discount rate for the projects is 10.5%.
a) Analyze these two projects and recommend a project to accept.
b) Carefully outline all your analysis and reasoning and discuss your methodologies for arriving at your solution in detail.
|
Project A |
Project B |
|
|
CF0 |
(4,650.00) |
(8,300.00) |
|
CF1 |
830.00 |
5,500.00 |
|
CF2 |
1,355.00 |
5,500.00 |
|
CF3 |
1,750.00 |
5,500.00 |
|
CF4 |
2,825.00 |
|
|
CF5 |
3,250.00 |
Solutions
jeff jeffy answered 2 years agoRelated Solutions
Consider the following cash flows on two mutually exclusive projects: Year Project A Project B 0...
Consider the following cash flows on two mutually exclusive
projects:
Year
Project A
Project B
0
–$
68,000
–$
83,000
1
48,000
47,000
2
43,000
56,000
3
38,000
59,000
The cash flows of Project A are expressed in real terms, whereas
those of Project B are expressed in nominal terms. The appropriate
nominal discount rate is 11 percent and the inflation rate is 5
percent. Calculate the NPV for each project. (Do not round
intermediate calculations and round your answers...
Mutually exclusive investments. The following are cash flows of two projects. Year Project A Project B 0...
Mutually exclusive investments.
The following are cash flows of two projects.
Year Project A Project B
0 $ (200) $ (200)
1 80 100
2 80 100
3 80 100
4 80
Calculate the NPV for both projects if the discount rate is
11%(Do not intermediate calculations.Round your answer to 2 decimal
places)
Suppose that you can only choose one of the these projects.
Which would you choose ?
project A
Project B
Neither
Consider the following cash flows on two mutually exclusive projects: Year Project A Project B 0...
Consider the following cash flows on two mutually exclusive
projects:
Year
Project A
Project B
0
67000
82000
1
47000
46000
2
42000
55000
3
37000
58000
The cash flows of Project A are expressed in real terms while
those of Project B are expressed in nominal terms. The appropriate
nominal discount rate is 10 percent and the inflation rate is 2
percent.
Calculate the NPV for each project. (Do not round
intermediate calculations and round your answers to...
Consider two mutually exclusive projects with the following cash flows: Project A Project B Time 0...
Consider two mutually exclusive projects with the following cash
flows:
Project A
Project B
Time 0
-10,000
-10,000
Time 1
5,000
4,000
Time 2
5,000
3,000
Time 3
2,000
6,000
At a cost of capital of 8%, which project should the company
choose? Explain which decision rule you should use in this case.
2. Consider the following cash flows on two mutually exclusive projects: The cash flows of project...
2.
Consider the following cash flows on two mutually exclusive
projects: The cash flows of project A are expressed in real terms
while those of Popject B are expressed in nominal terms. The
appropriate nominal discount rate is 11 percent and the inflation
rate is 4 percent. Which project should you
choose?
Project A (real cash flow)
Project B (nominal cash flow)
Year
0
(67,000)
(74,000)
1
34,000
34,000
2
37,000
45,000
3
...
Anderson Associates is considering two mutually exclusive projects that have the following cash flows: Project A...
Anderson Associates is considering two mutually exclusive
projects that have the following cash flows: Project A Project B
Year Cash Flow Cash Flow 0 -$10,000 -$8,000 1 4,000 7,000 2 2,000
3,000 3 6,000 1,000 4 8,000 3,000 At what cost of capital do the
two projects have the same net present value? (That is, what is the
crossover rate?) Enter your answer rounded to two decimal places.
Do not enter % in the answer box. For example, if your...
Two projects being considered are mutually exclusive and have the following cash flows: Year Project A...
Two projects being considered are mutually exclusive and have
the following cash flows:
Year
Project A
Project B
0
-$50,000
-$50,000
1
15,000
0
2
15,000
0
3
15,000
0
4
15,000
0
5
15,000
90,000
1) Calculate NPV of each project if
the required rate of return on these projects is 8 percent.
2) which would be chosen and why?
Anderson Associates is considering two mutually exclusive projects that have the following cash flows: Project A...
Anderson Associates is considering two mutually exclusive
projects that have the following cash flows: Project A Project B
Year Cash Flow Cash Flow 0 -$11,000 -$9,000 1 3,500 6,000 2 3,000
4,000 3 5,000 3,000 4 9,000 2,000 At what cost of capital do the
two projects have the same net present value? (That is, what is the
crossover rate?) Enter your answer rounded to two decimal places.
Do not enter % in the answer box. For example, if your...
Anderson Associates is considering two mutually exclusive projects that have the following cash flows: Project A...
Anderson Associates is considering two mutually exclusive
projects that have the following cash flows: Project A Project B
Year Cash Flow Cash Flow 0 -$11,000 -$9,000 1 3,500 6,000 2 3,000
4,000 3 5,000 3,000 4 9,000 2,000 At what cost of capital do the
two projects have the same net present value? (That is, what is the
crossover rate?) Enter your answer rounded to two decimal places.
Do not enter % in the answer box. For example, if your...
Anderson Associates is considering two mutually exclusive projects that have the following cash flows: Project A...
Anderson Associates is considering two mutually exclusive
projects that have the following cash flows: Project A Project B
Year Cash Flow Cash Flow
0 -$11,000 -$9,000
1 4,500 6,000
2 3,000 4,000
3 5,000 3,000
4 9,000 2,000
At what cost of capital do the two projects have the same net
present value? (That is, what is the crossover rate?) Enter your
answer rounded to two decimal places. Do not enter % in the answer
box. For example, if your...
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