Question
In: Finance
A firm with a WACC of 13% is evaluating two projects, A and B, for this...
A firm with a WACC of 13% is evaluating two projects, A and B, for this year’s capital budget. The after-tax cash flows are depicted as follows: Project A 0 1 2 3 4 5 | | | | | | -6,000 2,200 2,200 2,200 2,200 2,200 Project B 0 1 2 3 4 5 | | | | | | -18,000 5,800 5,800 5,800 5,800 5,800 Calculate NPV, IRR (Hint: between 24.00% and 24.50% for Project A; between 18.00% and 18.50% for Project B), MIRR, payback, and discounted payback for each project. [All answers should be corrected to 2 decimal places.] Assuming the two projects are independent, which one(s) would you recommend? If the projects are mutually exclusive, which would you recommend?
Solutions
jeff jeffy answered 1 year agoRelated Solutions
CAPITAL BUDGETING CRITERIA A firm with a 13% WACC is evaluating two projects for this year's...
CAPITAL BUDGETING CRITERIA
A firm with a 13% WACC is evaluating two projects for this
year's capital budget. After-tax cash flows, including
depreciation, are as follows:
0
1
2
3
4
5
Project M
-$6,000
$2,000
$2,000
$2,000
$2,000
$2,000
Project N
-$18,000
$5,600
$5,600
$5,600
$5,600
$5,600
Calculate NPV for each project. Round your answers to the
nearest cent. Do not round your intermediate calculations.
Project M $
Project N $
Calculate IRR for each project. Round your answers to two...
eBook A firm with a 13% WACC is evaluating two projects for this year's capital budget....
eBook
A firm with a 13% WACC is evaluating two projects for this
year's capital budget. After-tax cash flows, including
depreciation, are as follows:
0
1
2
3
4
5
Project M
-$3,000
$1,000
$1,000
$1,000
$1,000
$1,000
Project N
-$9,000
$2,800
$2,800
$2,800
$2,800
$2,800
Calculate NPV for each project. Do not round intermediate
calculations. Round your answers to the nearest cent.
Project M: $
Project N: $
Calculate IRR for each project. Do not round intermediate
calculations. Round your answers...
CAPITAL BUDGETING CRITERIA A firm with a 13% WACC is evaluating two projects for this year's...
CAPITAL BUDGETING CRITERIA
A firm with a 13% WACC is evaluating two projects for this
year's capital budget. After-tax cash flows, including
depreciation, are as follows:
0
1
2
3
4
5
Project M
-$3,000
$1,000
$1,000
$1,000
$1,000
$1,000
Project N
-$9,000
$2,800
$2,800
$2,800
$2,800
$2,800
Calculate NPV for each project. Round your answers to the
nearest cent. Do not round your intermediate calculations.
Project M $
Project N $
Calculate IRR for each project. Round your answers to two...
CAPITAL BUDGETING CRITERIA A firm with a 13% WACC is evaluating two projects for this year's...
CAPITAL BUDGETING CRITERIA
A firm with a 13% WACC is evaluating two projects for this
year's capital budget. After-tax cash flows, including
depreciation, are as follows:
0
1
2
3
4
5
Project M
-$12,000
$4,000
$4,000
$4,000
$4,000
$4,000
Project N
-$36,000
$11,200
$11,200
$11,200
$11,200
$11,200
Calculate NPV for each project. Round your answers to the
nearest cent. Do not round your intermediate calculations.
Project M $
Project N $
Calculate IRR for each project. Round your answers to two...
Capital budgeting criteria A firm with a 13% WACC is evaluating two projects for this year's...
Capital budgeting criteria A firm with a 13% WACC is evaluating
two projects for this year's capital budget. After-tax cash flows,
including depreciation, are as follows: 0 1 2 3 4 5 Project M
-$15,000 $5,000 $5,000 $5,000 $5,000 $5,000 Project N -$45,000
$14,000 $14,000 $14,000 $14,000 $14,000 Calculate NPV for each
project. Round your answers to the nearest cent. Do not round your
intermediate calculations. Project M $ Project N $ Calculate IRR
for each project. Round your answers...
CAPITAL BUDGETING CRITERIA A firm with a 13% WACC is evaluating two projects for this year's...
CAPITAL BUDGETING CRITERIA
A firm with a 13% WACC is evaluating two projects for this
year's capital budget. After-tax cash flows, including
depreciation, are as follows:
0
1
2
3
4
5
Project M
-$12,000
$4,000
$4,000
$4,000
$4,000
$4,000
Project N
-$36,000
$11,200
$11,200
$11,200
$11,200
$11,200
NPV for each project:
Project M $ 2,068.93
Project N $3,392.99
IRR for each project:
Project M 19.86%
Project N 16.80%
MIRR for each project:
Project M 16.65 %
Project N 15.05%
Calculate payback...
A firm with a 13% WACC is evaluating two projects for this year's capital budget. After-tax...
A firm with a 13% WACC is evaluating two projects for this
year's capital budget. After-tax cash flows, including
depreciation, are as follows:
0
1
2
3
4
5
Project M
-$18,000
$6,000
$6,000
$6,000
$6,000
$6,000
Project N
-$54,000
$16,800
$16,800
$16,800
$16,800
$16,800
Calculate NPV for each project. Do not round intermediate
calculations. Round your answers to the nearest cent.
Project M: $
Project N: $
Calculate IRR for each project. Do not round intermediate
calculations. Round your answers to...
A firm with a 13% WACC is evaluating two projects for this year's capital budget. After-tax...
A firm with a 13% WACC is evaluating two projects for this
year's capital budget. After-tax cash flows, including
depreciation, are as follows:
0
1
2
3
4
5
Project M
-$30,000
$10,000
$10,000
$10,000
$10,000
$10,000
Project N
-$90,000
$28,000
$28,000
$28,000
$28,000
$28,000
Calculate NPV for each project. Round your answers to the
nearest cent. Do not round your intermediate calculations.
Project M: $
Project N: $
Calculate IRR for each project. Round your answers to two
decimal...
A firm with a 13% WACC is evaluating two projects for this year's capital budget. After-tax...
A firm with a 13% WACC is evaluating two projects for this
year's capital budget. After-tax cash flows, including
depreciation, are as follows:
0
1
2
3
4
5
Project M
-$24,000
$8,000
$8,000
$8,000
$8,000
$8,000
Project N
-$72,000
$22,400
$22,400
$22,400
$22,400
$22,400
Calculate NPV for each project. Round your answers to the
nearest cent. Do not round your intermediate calculations.
Project M $
Project N $
Calculate IRR for each project. Round your answers to two
decimal places. Do...
A firm with a 13% WACC is evaluating two projects for this year's capital budget. After-tax...
A firm with a 13% WACC is evaluating two projects for this
year's capital budget. After-tax cash flows, including
depreciation, are as follows:
0
1
2
3
4
5
Project M
-$21,000
$7,000
$7,000
$7,000
$7,000
$7,000
Project N
-$63,000
$19,600
$19,600
$19,600
$19,600
$19,600
Calculate NPV for each project. Round your answers to the
nearest cent. Do not round your intermediate calculations.
Project M ____ $
Project N ____ $
Calculate IRR for each project. Round your answers to...
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