Question
In: Finance
Hodgkiss Enterprises has gathered projected cash flows for two projects. Year Project I Project J 0...
Hodgkiss Enterprises has gathered projected cash flows for two projects.
| Year | Project I | Project J | ||
| 0 | -269,000 | -269,000 | ||
| 1 | 113,100 | 96,400 | ||
| 2 | 106,800 | 100,900 | ||
| 3 | 90,800 | 102,900 | ||
| 4 | 79,800 | 109,900 | ||
At what interest rate would the company be indifferent between the two projects?
Which project is better if the required return is above this interest rate?
Solutions
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jeff jeffy answered 1 year agoRelated Solutions
Hodgkiss Enterprises has gathered projected cash flows for two projects. Year Project I Project J 0...
Hodgkiss Enterprises has gathered projected cash flows for two
projects.
Year
Project I
Project J
0
–$
259,000
–$
259,000
1
114,100
90,400
2
104,800
99,900
3
88,800
101,900
4
77,800
108,900
At what interest rate would the company be indifferent between
the two projects? (Do not round intermediate calculations
and enter your answer as a percent rounded to 2 decimal places,
e.g., 32.16.)
Interest rate
%
Which project is better if the required return is above this
interest...
Hodgkiss Enterprises has gathered projected cash flows for two projects. Year Project I Project J 0...
Hodgkiss Enterprises has gathered projected cash flows for two
projects.
Year
Project I
Project J
0
–$
256,000
–$
256,000
1
114,400
88,600
2
104,200
99,600
3
88,200
101,600
4
77,200
108,600
At what interest rate would the company be indifferent between
the two projects? (Do not round intermediate calculations
and enter your answer as a percent rounded to 2 decimal places,
e.g., 32.16.)
Interest rate
%
Which project is better if the required return is above this
interest...
The following are the cash flows of two projects: Year Project A Project B 0 ?$...
The following are the
cash flows of two projects:
Year
Project A
Project B
0
?$
380
?$
380
1
210
280
2
210
280
3
210
280
4
210
If the opportunity
cost of capital is 11%, what is the profitability index for each
project? (Do not round intermediate calculations. Round
your answers to 4 decimal places.)
The following are the cash flows of two projects: Year Project A Project B 0 ?$...
The following are the cash flows of two projects:
Year Project A Project B
0 ?$ 280 ?$ 280
1 160 180
2 160 180
3 160 180
4 160
If the opportunity cost of capital is 10%, what is the
profitability index for each project? (Do not round intermediate
calculations. Round your answers to 4 decimal places.) Project A
Profitability Index Project B
The following are the cash flows of two projects: Year Project A Project B 0 −$...
The following are the cash flows of two projects: Year Project A
Project B 0 −$ 290 −$ 290 1 170 190 2 170 190 3 170 190 4 170 If
the opportunity cost of capital is 11%, what is the profitability
index for each project? (Do not round intermediate calculations.
Round your answers to 4 decimal places.)
The following are the cash flows of two projects: Year Project A Project B 0 $...
The following are the cash flows of two projects:
Year
Project A
Project B
0
$
(330)
$
(330)
1
160
230
2
160
230
3
160
230
4
160
If the opportunity cost of capital is 12%, what is the
profitability index for each project? (Do not round
intermediate calculations. Round your answers to 4 decimal
places.)
Project Profitability Index:
A
B
The following are the cash flows of two projects: Year Project A Project B 0 ?$...
The following are the cash flows of two projects: Year Project A
Project B 0 ?$ 220 ?$ 220 1 100 120 2 100 120 3 100 120 4 100 If
the opportunity cost of capital is 10%, what is the profitability
index for each project? (Do not round intermediate calculations.
Round your answers to 4 decimal places.)
The following are the cash flows of two projects: Year Project A Project B 0 $...
The following are the
cash flows of two projects:
Year
Project A
Project B
0
$
(260
)
$
(260
)
1
140
160
2
140
160
3
140
160
4
140
a. Calculate the NPV for both projects if the
opportunity cost of capital is 16%. (Do not round
intermediate calculations. Round your answers to 2 decimal
places.)
Project A
Project B
b.
Suppose that you can choose only one of these projects. Which would
you choose?
Project A...
The following are the cash flows of two projects: Year Project A Project B 0 $...
The following are the cash flows of two projects:
Year
Project A
Project B
0
$
(330
)
$
(330
)
1
160
230
2
160
230
3
160
230
4
160
a. If the opportunity cost of capital is 12%,
calculate the NPV for both projects. (Do
not round intermediate calculations. Round your answers to 2
decimal places.)
b. Which of these projects is worth
pursuing?
****NOTE**** You are finding the NPV, NOT the Profitability
index!
The cash flows for the two projects are as follows? ($ million): Project Year 0 Year...
The cash flows for the two projects are as follows? ($
million):
Project
Year 0
Year 1
Year 2
Year 3
Year 4
A
- $ 100
$26
$28
$42
$52
B
-$ 100 $52 $42 $28 $18
a. What is the IRR of each? project?
b. What is the NPV of each project at your cost of? capital?
c. At what cost of capital are you indifferent between the two?
projects?
d. What should you? do?
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