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In: Finance
(Mutually exclusive projects and NPV) You have been assigned the task of evaluating two mutually exclusive...
(Mutually exclusive projects and NPV) You have been assigned the task of evaluating two mutually exclusive projects with the following projected cash flows:
YEAR PROJECT A CASH FLOW PROJECT B CASH
FLOW
0 -105,000 -105,000
1 40,000 0
2 40,000 0
3 40,000 0
4 40,000 0
5 40,000 240,000
If the appropriate discount rate on these projects is 8 percent, which would be chosen and why? What is the NPV of project A? What is the NPV of project b?
Solutions
jeff jeffy answered 1 year agoRelated Solutions
(Mutually exclusive projects and NPV) You have been assigned the task of evaluating two mutually exclusive...
(Mutually exclusive projects and NPV) You have been assigned
the task of evaluating two mutually exclusive projects with the
following projected cash flows: If the appropriate discount rate
on these projects is 11 percent, which would be chosen and why?
What is the NPV of project A? $ nothing (Round to the nearest
cent.) What is the NPV of project B? $ (Round to the nearest
cent.) Which project would be chosen and why? (Select the best
choice.) A....
(Mutually exclusive projects and NPV) You have been assigned the task of evaluating two mutually exclusive...
(Mutually exclusive projects and NPV)
You have been assigned the task of evaluating two mutually
exclusive projects with the following projected cash flows:
YEAR
PROJECT A
CASH FLOW
PROJECT B
CASH FLOW
0
−$110,000
−$110,000
1
30,000
0
2
30,000
0
3
30,000
0
4
30,000
0
5
30,000
220,000
(Click
on the icon located on the top-right corner of the data table
above in order to copy its contents into a
spreadsheet.)
If the appropriate discount rate on these...
You have been assigned the task of evaluating two mutually exclusive projects with the following projected...
You have been assigned the task of evaluating two mutually
exclusive projects with the following projected cash flows:
Year
Project A
Cash Flow
Project B
Cash Flow
0
$(110,000)
$(110,000)
1
40,000
0
2
40,000
0
3
40,000
0
4
40,000
0
5
40,000
240,000
If the appropriate discount rate on these projects is 8
percent, which would be chosen and why?
The NPV of Project A is $_____.
The NPV of Project A is $_____.
Which would be chosen...
You have been assigned the task of evaluating two mutually exclusive projects with the following projected...
You have been assigned the task of evaluating two mutually
exclusive projects with the following projected cash flows:
YEAR PROJECT A CASH FLOW PROJECT B CASH
FLOW
0 ------------- -100,000 --------------- -100,000
1 --------------- 33,000 --------------- 0
2 --------------- 33,000 --------------- 0
3 --------------- 33,000 --------------- 0
4 --------------- 33,000 --------------- 0
5 --------------- 33,000 --------------- 210,000
If the appropriate discount rate on these projects is 12
percent, which would be chosen and why?
1. What is the NPV of...
You have been assigned the task of evaluating two mutually exclusive projects with the following projected...
You have been assigned the task of evaluating two mutually
exclusive projects with the following projected cash flows:
YEAR PROJECT A CASH FLOW
PROJECT B CASH FLOW
0
-110,000
-110,000
1
30,000
0
2
30,000
0
3
30,000
0
4
30,000
0
5
30,000
210,000
If the appropriate discount rate on these projects is 9
percent, which would be chosen and why?
What is the NPV...
You have been assigned the task of evaluating two mutually exclusive projects with the following projected...
You have been assigned the task of evaluating two mutually
exclusive projects with the following projected cash flows:
Year
Project A
Cash Flow
Project B
Cash Flow
0
$(102,000)
$(102,000)
1
32,000
00
2
32,000
00
3
32,000
00
4
32,000
00
5
32,000
230, 000
If the appropriate discount rate on these projects is 88
percent, which would be chosen and why?
The NPV of Project A is
You have two mutually exclusive projects A and B and have constructed the NPV profiles for...
You have two mutually exclusive projects A and B and
have constructed the NPV profiles for these projects. You find that
the IRR of A is greater than the IRR of B but at an 8% cost of
capital using the NPV method you would prefer project B. What is
causing the NPV profile pattern that you are observing? Which
project do you prefer and why? Essentially you are preferring one
method over another so you need to discuss the...
You are evaluating two mutually exclusive projects. The cash flows for each are:
You are evaluating two mutually exclusive
projects. The cash flows for each are:
Project
A Project
B
Year
0 ($60,000) ($85,000)
Year
1 $20,000 $22,000
Year
2 $35,000 $25,000
Year
3 $20,000 $30,000
Year
4 $25,000 $25,000
Year
5 $15,000
Year
6 $10,000
Year
7 $10,000
Year
8 $10,000
Assume that, if needed, each project is repeatable with no
change in cash flows. Your cost of capital is 13%.
Using the replacement chain approach, which project would you
chose to...
The large furniture retailer “Sofa So Good” is evaluating two mutually exclusive projects: NPV versus...
The large furniture retailer “Sofa So Good” is evaluating two
mutually exclusive projects:
NPV versus IRR. Consider the following projects, where the firms
may only choose one not both:
The firm’s cost of capital/required return equals
9%
PLEASE NOTE: The firm’s cost of capital, K, acts as a hurdle rate,
and is based on the costs involved in financing other firm
projects. The Cost of capital allows us to decide to accept
or reject an investment,...
You are considering two mutually exclusive projects. The NPV for project one is positive and higher...
You are considering two mutually exclusive projects. The NPV for
project one is positive and higher than the NPV for project two,
while the IRR for project two is higher than that for project one.
Which project should the firm accept and why?
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