Questions
A company has an 11% WACC and is considering two mutually exclusive investments (that cannot be...

A company has an 11% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows:

0 1 2 3 4 5 6 7
Project A -$300 -$387 -$193 -$100 $600 $600 $850 -$180
Project B -$400 $131 $131 $131 $131 $131 $131 $0

  1. What is each project's NPV? Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest cent.

    Project A: $  

    Project B: $  

  2. What is each project's IRR? Do not round intermediate calculations. Round your answers to two decimal places.

    Project A:   %

    Project B:   %

  3. What is each project's MIRR? (Hint: Consider Period 7 as the end of Project B's life.) Do not round intermediate calculations. Round your answers to two decimal places.

    Project A:   %

    Project B:   %

  4. From your answers to parts a-c, which project would be selected?

    -Select-Project AProject BItem 7

    If the WACC was 18%, which project would be selected?

    -Select-Project AProject BItem 8

  5. Construct NPV profiles for Projects A and B. If an amount is zero, enter 0. Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest cent.

    Discount Rate NPV Project A NPV Project B
    0% $        $       
    5
    10
    12
    15
    18.1
    23.54

  6. Calculate the crossover rate where the two projects' NPVs are equal. Do not round intermediate calculations. Round your answer to two decimal places.

      %

  7. What is each project's MIRR at a WACC of 18%? Do not round intermediate calculations. Round your answers to two decimal places.

    Project A:   %

    Project B:   %

In: Finance

A company has a 13% WACC and is considering two mutually exclusive investments (that cannot be...

A company has a 13% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows:

0 1 2 3 4 5 6 7
Project A -$300 -$387 -$193 -$100 $600 $600 $850 -$180
Project B -$400 $134 $134 $134 $134 $134 $134 $0

  1. What is each project's NPV? Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest cent.

    Project A: $  

    Project B: $  

  2. What is each project's IRR? Do not round intermediate calculations. Round your answers to two decimal places.

    Project A:   %

    Project B:   %

  3. What is each project's MIRR? (Hint: Consider Period 7 as the end of Project B's life.) Do not round intermediate calculations. Round your answers to two decimal places.

    Project A:   %

    Project B:   %

  4. From your answers to parts a-c, which project would be selected?

    -Select-Project AProject BItem 7

    If the WACC was 18%, which project would be selected?

    -Select-Project AProject BItem 8

  5. Construct NPV profiles for Projects A and B. If an amount is zero, enter 0. Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest cent.

    Discount Rate NPV Project A NPV Project B
    0% $        $       
    5
    10
    12
    15
    18.1
    24.51

  6. Calculate the crossover rate where the two projects' NPVs are equal. Do not round intermediate calculations. Round your answer to two decimal places.

      %

  7. What is each project's MIRR at a WACC of 18%? Do not round intermediate calculations. Round your answers to two decimal places.

    Project A:   %

    Project B:   %

  

In: Finance

eBook Problem Walk-Through A company has a 12% WACC and is considering two mutually exclusive investments...

eBook Problem Walk-Through

A company has a 12% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows:

0 1 2 3 4 5 6 7
Project A -$300 -$387 -$193 -$100 $600 $600 $850 -$180
Project B -$400 $135 $135 $135 $135 $135 $135 $0

  1. What is each project's NPV? Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest cent.

    Project A: $  

    Project B: $  

  2. What is each project's IRR? Do not round intermediate calculations. Round your answers to two decimal places.

    Project A:   %

    Project B:   %

  3. What is each project's MIRR? (Hint: Consider Period 7 as the end of Project B's life.) Do not round intermediate calculations. Round your answers to two decimal places.

    Project A:   %

    Project B:   %

  4. From your answers to parts a-c, which project would be selected?

    -Select-Project AProject BItem 7

    If the WACC was 18%, which project would be selected?

    -Select-Project AProject BItem 8

  5. Construct NPV profiles for Projects A and B. If an amount is zero, enter 0. Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest cent.

    Discount Rate NPV Project A NPV Project B
    0% $        $       
    5
    10
    12
    15
    18.1
    24.83

  6. Calculate the crossover rate where the two projects' NPVs are equal. Do not round intermediate calculations. Round your answer to two decimal places.

      %

  7. What is each project's MIRR at a WACC of 18%? Do not round intermediate calculations. Round your answers to two decimal places.

    Project A:   %

    Project B:   %

In: Finance

A company has a 12% WACC and is considering two mutually exclusive investments (that cannot be...

A company has a 12% WACC and is considering two mutually exclusive investments (that cannot be repeated) with the following cash flows:

0 1 2 3 4 5 6 7
Project A -$300 -$387 -$193 -$100 $600 $600 $850 -$180
Project B -$400 $131 $131 $131 $131 $131 $131 $0

  1. What is each project's NPV? Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest cent.

    Project A: $  

    Project B: $  

  2. What is each project's IRR? Do not round intermediate calculations. Round your answers to two decimal places.

    Project A:   %

    Project B:   %

  3. What is each project's MIRR? (Hint: Consider Period 7 as the end of Project B's life.) Do not round intermediate calculations. Round your answers to two decimal places.

    Project A:   %

    Project B:   %

  4. From your answers to parts a-c, which project would be selected?

    -Select-Project AProject BItem 7

    If the WACC was 18%, which project would be selected?

    -Select-Project AProject BItem 8

  5. Construct NPV profiles for Projects A and B. If an amount is zero, enter 0. Negative values, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to the nearest cent.

    Discount Rate NPV Project A NPV Project B
    0% $        $       
    5
    10
    12
    15
    18.1
    23.54

  6. Calculate the crossover rate where the two projects' NPVs are equal. Do not round intermediate calculations. Round your answer to two decimal places.

      %

  7. What is each project's MIRR at a WACC of 18%? Do not round intermediate calculations. Round your answers to two decimal places.

    Project A:   %

    Project B:   %

In: Finance

Nutritionists are interested in comparing the absorption of calcium from calcium citrate malate (CCM)-fortified orange juice...

Nutritionists are interested in comparing the absorption of calcium from calcium citrate malate (CCM)-fortified orange juice and CCM-fortified apple juice. They have a random sample of 48 women to use in this study. SELECT ALL THAT APPLY

Which of these study designs is a matched pairs design?                                                

A.

The women are randomly assigned to one of two groups. Both groups were given a “standard” breakfast, but group one was given CCM apple juice and group two got CCM orange juice. Four hours later, the level of calcium in their blood is measured. The mean calcium levels of the two groups will be compared.
B.

The women are randomly assigned to one of two groups. The study proceeded as in (A) but continued on the second day when each group had breakfast again but had the opposite juice -- group one came back for breakfast with CCM-orange juice and group two got CCM-apple juice this time. (This is a “cross-over” design.) Researchers noted the difference in calcium absorption for each woman after drinking orange juice and after drinking apple juice.
C.

The women are randomly assigned to one of three groups. All three groups were given a “standard” breakfast, but group one was given CCM apple juice and group two got CCM orange juice. Group three was given their choice of non-fortified apple or orange juice. Four hours later, the level of calcium in their blood is measured. The mean calcium levels of the three groups will be compared.
D.

The 48 women were offered given a standard breakfast and offered either CCM apple juice or CCM orange juice. Each woman was matched to her preferred juice. After 4 hours, the level of calcium in their blood was measured and the average calcium levels of women who chose orange juice was compared to the calcium levels of apple juice drinkers.

Scientists studying the behavior of spiders have 12 orb spiders in their lab. Many orb spiders spin a new web each day. Does the amount of ambient light affect the size of the web? For each spider, the scientists measured the horizontal diameter (in mm) of the web spun under bright light conditions one day, and under low light conditions on a different day.

Here is the data:

spider

1

2

3

4

5

6

7

8

9

10

11

12

bright light

190

260

280

250

160

210

290

120

210

160

240

270

low light

170

170

160

120

170

240

120

180

200

100

160

330

The scientists verified the normality of the data. They are testing the null hypothesis that the mean diameter is the same under both lighting conditions, versus there is a difference. The test statistic for testing H0: μ = 0 versus Ha:  μ ≠ 0, where  μ = μdiff which is equal to  μbright - μlow, is _______________________ (give your answer to two decimal places)

In: Statistics and Probability

Consider the following four--?step assembly operation with quality problems. -The first resource has a processing time...

Consider the following four--?step assembly operation with quality problems.
-The first resource has a processing time of 7 minutes per unit and one employee doing the operation
? The second resource has a processing time of 4 minutes per unit. It also has one employee doing the operation. However, this is a very delicate task and 0.79 of all products have to be scrapped after this step.
? Two workers are staffed for the third resource. No quality problems occur at this resource and the processing time is 17minutes per unit.
? At the fourth and final resource, one operator handles the product. No quality problems exist at this step and the processing time is 12 minutes per unit.
What is the process capacity per hour? (keep two decimal)

In: Operations Management

Compute the correlations for the “Hot Growth Companies” in Date 1 for each pair of variables...

Compute the correlations for the “Hot Growth Companies” in Date 1 for each pair of variables rank, P/E ratio, and return, using the first 50 and second 50 values separately. Compare these results with those given in Example 2.4. Explain the differences.

Date 1

Rank Return on Capital P-E Ratio
1 51.5 37
2 68.5 53
3 35.3 71
4 28.7 21
5 28.2 26
6 29.8 14
7 24.4 36
8 27.4 38
9 32.3 24
10 35.1 37
11 32.5 26
12 15.9 36
13 18.5 47
14 15 22
15 22.3 13
16 17.2 26
17 21.2 24
18 13.5 19
19 30.3 48
20 21.2 27
21 14.1 50
22 26.7 55
23 16.1 23
24 20.3 33
25 21.2 15
26 18.3 14
27 30.6 22
28 16.6 34
29 15.7 7
30 13.4 42
31 28.2 18
32 11.2 45
33 17.3 26
34 19.9 27
35 19.6 17
36 16.7 11
37 13.1 41
38 17.8 43
39 17.7 28
40 14.5 52
41 15.2 22
42 8.9
43 14.7 31
44 12 19
45 10.9 19
46 14.8 22
47 15.9 11
48 12.9 38
49 21.8 21
50 12.1 30
51 8.5 25
52 18.6 25
53 12.1 22
54 15.1 21
55 17.9 15
56 9 25
57 11 29
58 18.1 24
59 6.3 30
60 15.1 23
61 15.9 22
62 15.8 19
63 18.9 23
64 12.7 18
65 15.1 28
66 8.7 29
67 15.1 25
68 15.5 14
69 12.6 17
70 7.6 24
71 7.5 43
72 13.4 28
73 7.4 14
74 15.6 26
75 11.5 25
76 10 31
77 8.6 15
78 14 31
79 12.9 20
80 10.4 16
81 12.2 19
82 9.3 32
83 12.6 21
84 12.5 26
85 13 39
86 15.8 32
87 14.4 28
88 10.6 16
89 12.2 31
90 11.4 13
91 11.7 6
92 12.3 37
93 12.3 29
94 14.5 20
95 13 28
96 14 23
97 10.6 30
98 11 21
99 10.4 31
100 11.1 29

Example 2.4

Rank Return on Capital P-E Ratio
1 51.5 37 Rank Return on Capital P-E Ratio
2 68.5 53 Rank 1
3 35.3 71 Return on Capital -0.647 1
4 28.7 21 P-E Ratio -0.267 0.306 1
5 28.2 26
6 29.8 14
7 24.4 36 This file shows the Excel verison of the example 2.4 in the book.
8 27.4 38
9 32.3 24
10 35.1 37
11 32.5 26
12 15.9 36
13 18.5 47
14 15 22
15 22.3 13
16 17.2 26
17 21.2 24
18 13.5 19
19 30.3 48
20 21.2 27
21 14.1 50
22 26.7 55
23 16.1 23
24 20.3 33
25 21.2 15
26 18.3 14
27 30.6 22
28 16.6 34
29 15.7 7
30 13.4 42
31 28.2 18
32 11.2 45
33 17.3 26
34 19.9 27
35 19.6 17
36 16.7 11
37 13.1 41
38 17.8 43
39 17.7 28
40 14.5 52
41 15.2 22
42 8.9
43 14.7 31
44 12 19
45 10.9 19
46 14.8 22
47 15.9 11
48 12.9 38
49 21.8 21
50 12.1 30
51 8.5 25
52 18.6 25
53 12.1 22
54 15.1 21
55 17.9 15
56 9 25
57 11 29
58 18.1 24
59 6.3 30
60 15.1 23
61 15.9 22
62 15.8 19
63 18.9 23
64 12.7 18
65 15.1 28
66 8.7 29
67 15.1 25
68 15.5 14
69 12.6 17
70 7.6 24
71 7.5 43
72 13.4 28
73 7.4 14
74 15.6 26
75 11.5 25
76 10 31
77 8.6 15
78 14 31
79 12.9 20
80 10.4 16
81 12.2 19
82 9.3 32
83 12.6 21
84 12.5 26
85 13 39
86 15.8 32
87 14.4 28
88 10.6 16
89 12.2 31
90 11.4 13
91 11.7 6
92 12.3 37
93 12.3 29
94 14.5 20
95 13 28
96 14 23
97 10.6 30
98 11 21
99 10.4 31
100 11.1 29

In: Statistics and Probability

The National Sleep Foundation used a survey to determine whether hours of sleeping per night are...

The National Sleep Foundation used a survey to determine whether hours of sleeping per night are independent of age (Newsweek, January 19, 2004). The following show the hours of sleep on weeknights for a sample of individuals age 49 and younger and for a sample of individuals age 50 and older.

Hours of Sleep
Age Fewer than 6 6 to 6.9 7 to 7.9 8 or more Total
49 or younger 35 65 71 69 240
50 or older 37 63 80 80 260
  1. Conduct a test of independence to determine whether the hours of sleep on weeknights are independent of age. Use = .05. Use Table 12.4.

    Compute the value of the 2 test statistic (to 2 decimals).


    The p value is Selectless than .005between .005 and .01between .01 and .025between .025 and .05between .05 and .10greater than .10

    What is your conclusion?
    SelectConclude age and hours of sleep are not independentCannot reject the assumption that age and hours of sleep are independent
  2. Using the total sample of 500, estimate the percentage of people who sleep less than 6, 6 to 6.9, 7 to 7.9, and 8 or more hours on weeknights (to 1 decimal).
    Less than 6 hours %
    6 to 6.9 hours %
    7 to 7.9 hours %
    8 or more hours %

In: Statistics and Probability

The National Sleep Foundation used a survey to determine whether hours of sleeping per night are...

The National Sleep Foundation used a survey to determine whether hours of sleeping per night are independent of age (Newsweek, January 19, 2004). The following show the hours of sleep on weeknights for a sample of individuals age 49 and younger and for a sample of individuals age 50 and older.

Hours of Sleep
Age Fewer than 6 6 to 6.9 7 to 7.9 8 or more Total
49 or younger 39 58 71 72 240
50 or older 32 56 77 95 260
  1. Conduct a test of independence to determine whether the hours of sleep on weeknights are independent of age. Use  = .05. Use Table 12.4.

    Compute the value of the  2 test statistic (to 2 decimals).


    The p value is Selectless than .005between .005 and .01between .01 and .025between .025 and .05between .05 and .10greater than .10Item 2

    What is your conclusion?
    SelectConclude age and hours of sleep are not independentCannot reject the assumption that age and hours of sleep are independentItem 3
  2. Using the total sample of 500, estimate the percentage of people who sleep less than 6, 6 to 6.9, 7 to 7.9, and 8 or more hours on weeknights (to 1 decimal).
    Less than 6 hours %
    6 to 6.9 hours %
    7 to 7.9 hours %
    8 or more hours %

In: Statistics and Probability

The National Sleep Foundation used a survey to determine whether hours of sleeping per night are...

The National Sleep Foundation used a survey to determine whether hours of sleeping per night are independent of age (Newsweek, January 19, 2004). The following show the hours of sleep on weeknights for a sample of individuals age 49 and younger and for a sample of individuals age 50 and older.
Hours of Sleep
Age Fewer than 6 6 to 6.9 7 to 7.9 8 or more Total
49 or younger 38 65 70 67 240
50 or older 34 59 73 94 260
  1. Conduct a test of independence to determine whether the hours of sleep on weeknights are independent of age. Use = .05. Use Table 12.4.

    Compute the value of the 2 test statistic (to 2 decimals).


    The p value is Selectless than .005between .005 and .01between .01 and .025between .025 and .05between .05 and .10greater than .10

    What is your conclusion?
    SelectConclude age and hours of sleep are not independentCannot reject the assumption that age and hours of sleep are independent
  2. Using the total sample of 500, estimate the percentage of people who sleep less than 6, 6 to 6.9, 7 to 7.9, and 8 or more hours on weeknights (to 1 decimal).
    Less than 6 hours %
    6 to 6.9 hours %
    7 to 7.9 hours %
    8 or more hours %

In: Statistics and Probability