Question

In: Finance

a) Four investment projects have the following net cash flows. The cost of capital is 15%....

a) Four investment projects have the following net cash flows. The cost of capital is 15%. Decide which of them should be accepted using the net present value method.

  1. Find the discounted payback period.

YEAR

PROJECT A

PROJECT B

PROJECT C

PROJECT D

0

(10,000)

(15,000)

(20,000)

(30,000)

1

5,000

5,000

10,000

0

2

5000

5,000

10,000

0

3

20,000

5,000

4,000

100,000

4

1,000

10,000

2,000

120,000

5

-

5,000

-

60,000

Solutions

Expert Solution

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

The cash flows for four projects are shown below, along with the cost of capital for...
The cash flows for four projects are shown below, along with the cost of capital for these projects. If these projects are mutually exclusive, which one should be taken? A. Year:                         0                1            2              3            4                  5 Cash flow:                     -$12,000    $4000    $4000      $4000    $4000          $4000 Cost of Capital: 5.0% B. Year:                              0                1            2              3            4                  5 Cash flow:                     -$15,000    $4000    $4000      $4000    $4000          $4000 Cost of Capital: 7.0% C. Year:                              0                1            2              3            4                  5 Cash flow:                     -$20,000    $6000    $6000      $6000    $6000          $6000 Cost of Capital: 8.2% D. Year:                              0               ...
) The cash flows for four projects are shown below, along with the cost of capital...
) The cash flows for four projects are shown below, along with the cost of capital for these projects. If these projects are mutually exclusive, which one should be taken? 28) A) Year: 0 1 2 3 4 5 Cash flow: -$20,000 $6000 $6000 $6000 $6000 $6000 Cost of Capital: 8.2% B) Year: 0 1 2 3 4 5 Cash flow: -$15,000 $4000 $4000 $4000 $4000 $4000 Cost of Capital: 7.0% C) Year: 0 1 2 3 4 5 Cash...
A firm with a cost of capital of 10% considers the following capital investment: Cash Flows:...
A firm with a cost of capital of 10% considers the following capital investment: Cash Flows: Year 0 -4 million Year 1 26.5 Million Year 2 -24.2 Million (A) According to the IRR given by your financial calculator, should the firm accept this project? (B) Up to how many IRRs could this project have? (C) According to the MIRR, should the firm accept this project? (D) Should the firm accept this project? Justify your answer using the NPV. (Please show...
Projects SS and LL have the cash flows shown below. If a 10% cost of capital...
Projects SS and LL have the cash flows shown below. If a 10% cost of capital is appropriate for both of them, what are their NPVs?   0 1 2 3 SS -700 500 300 100 LL -700 100 300 600 What project or set of projects would be in your capital budget if SS and LL were independent?
Projects A B Cost (initial investment) 40000 250000 Year Cash flows of A Cash flows of...
Projects A B Cost (initial investment) 40000 250000 Year Cash flows of A Cash flows of B 1 10000 40000 2 10000 120000 3 10000 200000 4 10000 200000 5 10000 200000 6 10000 200000 What are the Payback Periods of Projects A, and B? Assume all cash flows are evenly spread throughout the year and already discounted. If the cut-off period ( الفتره المقبوله) is three years, which projects do you accept?
2. Given the following expected cash flows for two projects, and an opportunity cost of capital...
2. Given the following expected cash flows for two projects, and an opportunity cost of capital of 10%, which project is better and why? (10 points)             Expected Net Cash Flows Year    Project A         Project B 0          -$10,000          -$10,000 1          $5000              $0 2          $5000              $0 3          $5000              $8,000 4          $5000              $2,000 3. Given the following expected cash flows for two projects, and an opportunity cost of capital of 8%, which project is better and why? (10 points)             Expected Net...
5. Assume a $200,000 investment and the following cash flows for two alternative capital projects: Year...
5. Assume a $200,000 investment and the following cash flows for two alternative capital projects: Year Project A Project B 1 $60,000 $40,000 2 90,000 70,000 3 50,000 80,000 4 40,000 20,000 a. Calculate the payback period for each project. b. Using the payback method, if the projects are mutually exclusive, which project would you select and why? c. If the year four cash flows were $100,000 for Project A and $500,000 for Project B, would your decision change under...
Consider the following cash flows for two mutually exclusive capital investment projects. The required rate of...
Consider the following cash flows for two mutually exclusive capital investment projects. The required rate of return is 16%. Use this information for the next 3 questions. Year Project A Cash Flow Project B Cash Flow 0 ($50,000) ($20,000) 1 15,000 6,000 2 15,000 6,000 3 15,000 6,000 4 13,500 5,400 5 13,500 5,400 6 6,750 5,400 Calculate the net present value of project A. Answers: a.342.28 b.1564.25 c.1245.11 d. 2709.21 e. 3802
Consider the following cash flows for two mutually exclusive capital investment projects. The required rate of...
Consider the following cash flows for two mutually exclusive capital investment projects. The required rate of return is 15%. Use this Year         Project A Cash Flow        Project B Cash Flow 0                         -$40,000                           -$30,000 1                              12,000                            9,000 2                              12,000                             9,000 3                              12,000                             9,000 4                              10,800      8,100 5                              10,800                              8,100 6                              5,400      8,100 9. Which of the following statements is true concerning projects A and B? a) Both NPV and IRR lead to the same investment decision. b) Due to time disparity, IRR indicates that project A should be accepted and NPV indicates that project B...
University Hospital has four capital projects under consideration with the following investments and projected cash flows....
University Hospital has four capital projects under consideration with the following investments and projected cash flows. What is their optimal capital budget allocation if their corporate cost of capital is 12%? Year 0 1 2 3 4 5 Project A        (600,000)                                 50,000                    90,000        150,000        200,000        250,000 B        (400,000)                                 80,000                  100,000        100,000        100,000        100,000 C        (700,000)                              100,000                  220,000        250,000        250,000        250,000 D       ...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT