Juan is considering two independent projects. Project A costs $50,000 and cash flows of $18,700, $46,300,...
QUESTION 1 Star Industries is considering three alternative projects for the company's investment. The cash flows for three independent projects are as follows: Year 1 Project A ($50,000) $10,000 $15,000 $20,000 $25,000 $30,000 Project B ($100,000) $25,000 $25,000 $25,000 $25,000 $25,000 Project C ($450,000) $200,000 $200,000 $200,000 a) If the discount rate for all three projects is 9.5 percent, calculate the profitability index (PI) of these three projects. Which project will be accepted if the projects are mutually exclusive? b)...
Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown below. The required rate of return on projects of both of their risk class is 8 percent, and that the maximum allowable payback and discounted payback statistic for the projects are 2 and 3 years, respectively. Time: 0 1 2 3 Project A Cash Flow -35,000 25,000 45,000 16,000 Project B Cash Flow -45,000 25,000 35,000 65,000 Use the PI decision rule to evaluate these...
13. A project has an initial cost of $38,300 and anticipated cash flows of $9,200, $18,700, $14,600 for Years 1 to 3, respectively. What is the profitability index value if the required return is 9.5 percent? .99 .86 .92 1.16 1.09
Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown below. The required rate of return on projects of both of their risk class is 8 percent, and that the maximum allowable payback and discounted payback statistic for the projects are 2 and 3 years, respectively. Time: 0123 Project -35,000 25,000 45,000 16,000 A Cash Flow Project -45,000 25,000 35,000 B Cash Flow Use the NPV decision rule to evaluate these projects; which one(s) should...
Consider the following two independent investment projects: Cash flows of project A: 0 1 2 3 T + + 100 -130 50 5 Cash flows of project B: 0 2 3 4 5 + + + + 다. -130 90 40 40 40 40 If management only accepts projects that pay back in 3 years or less, according to the discounted payback period rule, which projects will be selected? Use a discount rate of 10%.
Project S costs $16,000 and its expected cash flows would be $4,500 per year for 5 years. Mutually exclusive Project L costs $50,000 and its expected cash flows would be $12,200 per year for 5 years. If both projects have a WACC of 12%, which project would you recommend?
The following are the cash flows of two independent projects: Year Project A Project B 0 (210) (210) 1 90 110 2 90 110 3 90 110 4 90 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? Project A Project B Both Neither
A firm is considering the following projects. Its opportunity cost of capital is 10%. Cash Flows, $ Project Time: 0 1 2 3 4 A -7,300 +1,575 +1,575 +4,150 0 B -3,300 0 +3,300 +3,150 +4,150 C -7,300 +1,575 +1,575 +4,150 +7,300 a. What is the payback period on each project? Project A - ____ years Project B - ____ years Project C - ____ years What is the discounted payback period on each project? (Round...
Question 5 a. Given the following cash flows, for the two independent projects A and B, calculate i. Payback Period ii. Accounting rate of return iii. Net Present Value iv. Profitability index And recommend acceptance or rejection of projects considering individual techniques of capital budgeting. A rate of 10 % has been selected for the NPV analysis. Project A Project B Initial outlay $50,000 $100,000 Cash inflows Year 1 $10,000 $ 25,000 Year 2 15,000 ...
Your firm is considering two projects with the following cash flows: Cash flows from project B (£000) (500) 200 250 170 25 30 Year Cash flows from project A (£000) 0(500) 167 180 160 100 100 4 1. Calculate the ARR and payback rule 2. If the appropriate discount rate is 12%, rank the two projects 3. Which project is preferred if you rank by IRR? 4. Calculate the discount rate (r) for which the NPVs of both projects are...