Question
In: Finance
A firm with a 14% WACC is evaluating two projects for this years capital budget. After...
A firm with a 14% WACC is evaluating two projects for this years 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
1) What is the MIRR?
2) If the projects are mutually exclusive, which would you recommend?
3) Notice that the projects have the same cash flow timing pattern. Why is there a conflict between NPV and IRR?
Solutions
jeff jeffy answered 1 year agoRelated Solutions
A firm with a 14% WACC is evaluating two projects for this year's capital budget. After-tax...
A firm with a 14% 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. 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 14% WACC is evaluating two projects for this year’s capital budget. After-tax...
A firm with a 14% WACC is evaluating two projects for this
year’s capital budget. After-tax cash flows, including
depreciation, are as follows:
PROJECT A: year 0 = -$6000 | year 1 = $2000 | year 3 = $2000 |
year 4 = $2000 | year 5 = $2000
PROJECT B: Year 0 = -$18,000 | Year 1 = $5600 | Year 2 = $5600 |
year 3 = $5600 | year 4 = $5600 | year 5 = $5600...
A firm with a 14% WACC is evaluating two projects for this year's capital budget. After-tax...
A firm with a 14% 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. 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 14% WACC is evaluating two projects for this year's capital budget. After-tax...
A firm with a 14% 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. 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 14% WACC is evaluating two projects for this year's capital budget. After-tax...
A firm with a 14% WACC is evaluating two projects for this
year's capital budget. After-tax cash flows, including
depreciation, are as follows:
Project M -$27,000 $9,000 $9,000 $9,000 $9,000
$9,000
Project N -$81,000 $25,200 $25,200 $25,200 $25,200 $25,200
Calculate NPV for each project. Do not round intermediate
calculations. Round your answers to the nearest cent.
Calculate M $_____
Calculate N $______
Calculate IRR for each project. Do not round intermediate
calculations. Round your answers to two decimal places.
Calculate...
A firm with a 14% WACC is evaluating two projects for this year's capital budget. After-tax...
A firm with a 14% 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
decimal places. Do...
A firm with a 14% WACC is evaluating two projects for this year capital budget. After-tax...
A firm with a 14% WACC is evaluating two projects for this year
capital budget. After-tax cash flows, including depreciation, are
as follows:
0 1 2 3 4 5
Project A -$6,000 $2,000 $2,000 $2,000 $2,000 $2,000
Project B -18,000 $5,600 $5,600 $5,600 $5,600
$5,600
a. Calculate the NPV, IRR, MIRR, payback, and discounted payback
for each project.
b. Assuming the projects are independent, which one(s) would you
recommend?
c. If the projects are mutually exclusive, which would you
recommend?...
A firm with a 14% WACC is evaluating two projects for this year's capital budget. After-tax...
A firm with a 14% 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 two
decimal places. Do...
A firm with a 14% WACC is evaluating two projects for this year's capital budget. After-tax...
A firm with a 14% 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...
A firm with a 14% WACC is evaluating two projects for this year's capital budget. After-tax...
A firm with a 14% 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. 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...
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