Question
In: Finance
Here are the cash flows for two mutually exclusive projects: Project C0 C1 C2 C3 A...
Here are the cash flows for two mutually exclusive projects:
| Project | C0 | C1 | C2 | C3 | |||||||||||
| A | −$ | 21,800 | +$ | 9,592 | +$ | 9,592 | +$ | 9,592 | |||||||
| B | − | 21,800 | 0 | 0 | + | 29,430 | |||||||||
What is the IRR of each project? (Round your answers to 2
decimal places.)
PRoject A %
Project B %
Solutions
jeff jeffy answered 2 years agoRelated Solutions
Here are the cash flows for two mutually exclusive projects: Project C0 C1 C2 C3 A...
Here are the cash flows for two mutually exclusive projects:
Project
C0
C1
C2
C3
A
−$
23,000
+$
10,120
+$
10,120
+$
10,120
B
−
23,000
0
0
+
31,050
What is the IRR of each project? (Round your answers to
2 decimal places.)
Consider the following two mutually exclusive projects: Cash Flows ($) Project C0 C1 C2 C3 A...
Consider the following two mutually
exclusive projects:
Cash Flows ($)
Project
C0
C1
C2
C3
A
-$100
+$60
+$60
+$60
B
-$100
----
----
+$208.35
Calculate the NPV of each project for a discount rate of
14%.
What is approximately the IRR for each project individually?
Use the IRR cross-over method to determine which of the projects
you should accept (describe the correct decision rule describing
when you pick A versus B based on what discount rate).
Consider two mutually exclusive projects A and B: Cash Flows (dollars) Project C0 C1 C2 NPV...
Consider two mutually exclusive projects A and B:
Cash Flows (dollars)
Project
C0
C1
C2
NPV at 12%
A
−31,000
21,800
21,800
+$5,843
B
−51,000
34,000
34,000
+6,462
a. Calculate IRRs for A and B. (Do not
round intermediate calculations. Enter your answers as a percent
rounded to 2 decimal places.)
Here are the cash flows for two mutually exclusive projects: Project C0 &n
Here are the cash flows for two mutually exclusive projects:
Project
C0
C1
C2
C3
A
-20,000
+8,000
+8,000
+8,000
B
-20,000
0
0
+25,000
At what interest rate would you prefer project A to B? (Hint:
try drawing a NPV profile.)
a)
If the discount rate is below 3%.
b)
If the discount rate is above 3%.
c)
If the discount rate is above 4%.
d)
A is never preferred to B at any...
Consider the following projects: Cash Flows ($) Project C0 C1 C2 C3 C4 C5 A −2,000...
Consider the following projects:
Cash Flows ($) Project C0 C1 C2 C3 C4 C5
A −2,000 2,000 0 0 0 0
B −4,000 2,000 2,000 5,000 2,000 2,000
C −5,000 2,000 1,300 0 2,000 2,000
a. If the opportunity cost of capital is 12%, which project(s)
have a positive NPV?
Positive NPV project(s)
Project A
Project B
Project C
Projects A and B
Projects A and C
Projects B and C
Projects A, B, and C
No project
b. Calculate...
Consider the following projects: Cash Flows ($) Project C0 C1 C2 C3 C4 C5 A −2,500...
Consider the following projects:
Cash Flows ($)
Project
C0
C1
C2
C3
C4
C5
A
−2,500
2,500
0
0
0
0
B
−5,000
2,500
2,500
5,500
2,500
2,500
C
−6,250
2,500
2,500
0
2,500
2,500
a. If the opportunity cost of capital is 9%,
which project(s) have a positive NPV?
Positive NPV project(s)
Project A
Project B
Project C
Projects A and B
Projects A and C
Projects B and C
Projects A, B, and C
No project
b. Calculate...
Consider the following projects: Cash Flows ($) Project C0 C1 C2 C3 C4 C5 A −2,800...
Consider the following
projects:
Cash Flows ($)
Project
C0
C1
C2
C3
C4
C5
A
−2,800
2,800
0
0
0
0
B
−5,600
2,800
2,800
5,800
2,800
2,800
C
−7,000
2,800
2,500
0
2,800
2,800
If the opportunity
cost of capital is 12%, which project(s) have a positive NPV?
Positive NPV Projects
Calculate the payback
period for each project.
Project A
years
Project B
years
Project C
years
Which project(s) would
a firm using the payback rule accept...
Cash flows of Project A and B are as following: Project C0 C1 C2 C3 C4...
Cash flows of Project A and B are as following:
Project
C0
C1
C2
C3
C4
C5
A
-9000
2000
3000
4000
5000
6000
B
-11000
2000
3000
4000
5000
6000
Compute the
payback periods for the following two projects.
Payback period
for A = _________ years; for B __________years
If the discount
rate is 10%, what is the discounted payback period?
Discounted
payback period for A=_________ years; for B __________years
Consider the following two mutually exclusive projects withtheir expected Cash Flows ($)Project C0 C1...
Consider the following two mutually exclusive projects with
their expected Cash Flows ($)Project C0 C1 C2 C3A –$100 +$60 +$60 +$60B –$100 ------ ------ +$208.35What is the cross-over rate for these two projects?a. unknown, because the discount rate is unkownb. 28%c. 36%d. 32%e. 15%
A project has the following forecasted cash flows: Cash Flows ($ thousands) C0 C1 C2 C3...
A project has the following forecasted cash flows:
Cash Flows ($ thousands)
C0
C1
C2
C3
−155
+95
+115
+105
The estimated project beta is 1.51. The market return
rm is 15%, and the risk-free rate
rf is 3%.
a. Estimate the opportunity cost of capital and
the project’s PV (using the same rate to discount each cash flow).
(Do not round intermediate calculations. Enter your cost of
capital answer as a percent and enter your PV answer in thousands....
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