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In: Finance
Braun Industries is considering the following mutually exclusive projects. Braun’s cost of capital is 9%. Year...
Braun Industries is considering the following mutually exclusive projects. Braun’s cost of capital is 9%.
| Year | Project A | Project B |
|---|---|---|
| 0 | ($86,000) | ($86,000) |
| 1 | $42,000 | $63,000 |
| 2 | $32,000 | $28,000 |
| 3 | $12,900 | $8,000 |
| 4 | $12,200 | $3,000 |
| 5 | $12,000 | $2,000 |
a. Calculate each project’s NPV and IRR.
b. Find the Payback Period for each project.
c. Find the MIRR for each project.
d. Which of these projects should Braun accept? Why?
Please show all work step by step.
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Braun Industries is considering the following mutually exclusive projects. Braun’s cost of capital is 9%. ...
Braun Industries is considering the following mutually exclusive
projects. Braun’s cost of capital is 9%.
Year Project
A
Project B
0
($86,000)
($86,000)
1
$42,000
$63,000
2
$32,000
$28,000
3
$12,900
$8,000
4
$12,200
$3,000
5
$12,000
$2,000
a. Calculate each
project’s NPV and IRR.
b. Find the Payback Period
for each project.
c. Find the MIRR for each
project.
d. Which of these projects
should Braun accept? Why?
Diamond City is considering two mutually exclusive investment projects. The cost of capital for these projects...
Diamond City is considering two mutually exclusive investment
projects. The cost of capital for these projects is r. The
projects’ expected net cash flows are as follows: Year Project A
Project B
0 -42,000 -42,000
1 24,000 16,000
2 20,000 18,000
3 16,000 22,000
4 12,000 26,000
a. If r = 10%, which project should be selected under the NPV
method?
b. If r = 20%, which project should be selected under the NPV
method?
c. Calculate each project’s PI...
Diamond City is considering two mutually exclusive investment projects. The cost of capital for these projects...
Diamond City is considering two mutually exclusive investment
projects. The cost of capital for these projects is r. The
projects’ expected net cash flows are as follows: Year Project A
Project B
0 -42,000 -42,000
1 24,000 16,000
2 20,000 18,000
3 16,000 22,000
4 12,000 26,000
a. Calculate each project’s payback (PB) period if r = 10% (up
to 2 decimal places). Which project should be accepted?
b. Calculate each project’s discounted payback (DPB) period if r
= 10%...
Callaway Associates, Inc. is considering the following mutually exclusive projects. Callaway's cost of capital is 12%....
Callaway Associates, Inc. is considering the following mutually
exclusive projects. Callaway's cost of capital is 12%.
Project A PROJECT B
0 ($25,000)
($80,000)
1 $44,000 $65,000
2 $34,000 $30,000
3 $14,000 $ 0
4 $14,000 $5,000
a. Calculate each project's NPV and IRR.
b. Which project should be undertaken ? Why?
a.
9) A firm with a WACC of 10% is considering the following mutually exclusive projects: 0...
9)
A firm with a WACC of 10% is considering the following mutually
exclusive projects:
0
1
2
3
4
5
Project 1
-$200
$70
$70
$70
$165
$165
Project 2
-$550
$300
$300
$130
$130
$130
Which project would you recommend?
Select the correct answer.
a. Neither Project 1 nor 2, since each project's NPV <
0.
b. Project 2, since the NPV2 >
NPV1.
c. Both Projects 1 and 2, since both projects have IRR's >
0.
d....
Your company is considering investing in one of two mutually exclusive projects. The cost of capital...
Your company is considering investing in one of two mutually
exclusive projects. The cost of capital is 11%. The first project
Has $25,000 annual cash inflows, a 10-year life, and will cost
$120,000 at time zero. The second project has a 7-year life, Annual
cash inflows of $20,000 per year, and a cost of $75,000 at time
zero. Which project has the highest NPV. Assuming that these
projects will most likely be repeated indefinitely into the future,
which project would...
Your company is considering investing in one of two mutually exclusive projects. The cost of capital...
Your company is considering investing in one of two mutually
exclusive projects. The cost of capital is 11%. The first project
Has $25,000 annual cash inflows, a 10-year life, and will cost
$120,000 at time zero. The second project has a 7-year life, Annual
cash inflows of $20,000 per year, and a cost of $75,000 at time
zero. Which project has the highest NPV. Assuming that these
projects will most likely be repeated indefinitely into the future,
which project would...
Problem 10-17 Callaway Associates, Inc. is considering the following mutually exclusive projects. Callaway's Cost of capital...
Problem 10-17
Callaway Associates, Inc. is considering the following mutually
exclusive projects. Callaway's Cost of capital is 10%.
Year
Project A
Project B
0
($80,000)
($80,000)
1
$44,000
$65,000
2
$34,000
$30,000
3
$14,000
$0
4
$14,000
$5,000
Calculate each project's NPV and IRR. Round the answers to two
decimal places.
Project A
Project B
NPV:
$
$
IRR:
%
%
Which project should be undertaken?
Thomas Company is considering two mutually exclusive projects. The firm, which has a cost of capital...
Thomas Company is considering two mutually exclusive projects.
The firm, which has a cost of capital of 8%, has estimated its
cash flows as shown in the following table:
A is on the left, B is on the right
Initial investment
130000
102000
Year
Cash inflows
1
20000
55000
2
40000
40000
3
50000
20000
4
60000
15000
5
50000
20000
a. Calculate the NPV of each project, and assess its
acceptability.
b. Calculate the IRR for each project, and...
Jamison is considering two mutually exclusive projects with the following cash flows and the cost of...
Jamison is considering two mutually exclusive projects with the
following cash flows and the cost of capital of 10%.
Year XX YY
0 -$1,000 -$1,200
1 $800 $700
2 $800 $700
3 $700
a) Based on Annualized NPV, which project would you choose? Why
ANPV is better than NPV in this case.?
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