EXCEL ONLY, PLEASE SHOW FORMULA WORK A company is considering three capital budgeting projects. Data relative...
EXCEL ONLY, PLEASE SHOW FORMULA WORK
A company is considering three capital budgeting projects. Data relative to each is given below. Each project has a life of 5 years. The company uses the NPV method to evaluate capital budgeting projects and its discount rate is 9%. Project A Project B Project C Initial cash outlay (cost) -$5,000,000 -$6,000,000 -$3,000,000 Cash inflows per year $1,500,000 $1,800,000 $ 600,000 Residual value $ 500,000 0 $100,000 1. If the projects are mutually exclusive, which, if any, should the company accept? Why? 2. If the projects are independent, which, if any, should the company accept? Why? 3. One of the company’s managers states “To me, no matter what else we do, Project C needs to be our first choice because it has the lowest initial cost of $3,000,000.” Comment on this manager’s proposal, considering the tenets of NPV.
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EXCEL ONLY, PLEASE SHOW FORMULA WORK
A company is considering three capital budgeting projects. Data
relative...
6) A firm is evaluating three mutually exclusive capital budgeting projects. The net present value of...
6) A firm is evaluating three mutually exclusive capital budgeting projects. The net present value of each project is shown below. Given this information, which project() should the firm accept? Project 1 100,000 NPV, S Project 2 10,000 Project 3 - 100,000 a) accept Projects 1 and 2, and reject Project 3 b) accept Projects 1 and 3, and reject Project 2 c) accept Project 3, and reject Projects 1 and 2 d) accept Project 1, and reject Projects 2...
x fx Capital Budgeting Capital Budgeting Wenling Consulting Services is considering an eight year investment in...
x fx Capital Budgeting Capital Budgeting Wenling Consulting Services is considering an eight year investment in two projects, A and B. Both projects will have Initial outlay, $120,000, and the terminal cash flow, $11,000. The annual after-tax operating cash flows are as follo 1 $ 3 4 5 6 7 $ $ $ $ $ Project A 31,000.00 28,700.00 23,440.00 23,200.00 21,000.00 19,900.00 18,900.00 16,500.00 $ $ $ $ $ $ $ 5 Project B 19,000.00 19,500.00 22,700.00 24,300.00 27,000.00...
Please use Excel to solve. NPV and IRR for Mutually Exclusive Projects 10. A company is...
Please use Excel to solve.
NPV and IRR for Mutually Exclusive Projects 10. A company is considering two mutually exclusive projects, A and B. Project A requires an initial investment of $200, followed by cash flows of $185, $40, and $15. Project B requires an initial investment of $200, followed by cash flows of S0, $50, and $230. What is the NPV and IRR for each of the projects? Which project should the company choose? The firm's cost of capital...
CAPITAL BUDGETING CRITERIA: MUTUALLY EXCLUSIVE PROJECTS Project S requires an initial outlay at t = 0...
CAPITAL BUDGETING CRITERIA: MUTUALLY EXCLUSIVE PROJECTS Project S requires an initial outlay at t = 0 of $17,000, and its expected cash flows would be $5,000 per year for 5 years. Mutually exclusive Project L requires an initial outlay at t = 0 of $30,000, and its expected cash flows would be $8,750 per year for 5 years. If both projects have a WACC of 12%, which project would you recommend? Explain.
Thomas Company is considering two mutually exclusive projects. The firm has a 12% cost of capital....
Thomas Company is considering two mutually exclusive projects. The firm has a 12% cost of capital. Cash inflows Initial investment Year 1 Year 2 Year 3 Year 4 Year 5 Project A Project B $130000 $85000 $25000 $35000 $45000 $50000 $55000 $40000 $35000 $30000 $10000 $5000 Evaluate and discuss the rankings of NPV and IRR of the two projects on the basis of your finding. O A Project B should be chosen because it has a higher IRR than Project...
Ch 11: Assignment - The Basics of Capital Budgeting OX Suppose Blue Hamster Manufacturing Inc. is...
Ch 11: Assignment - The Basics of Capital Budgeting OX Suppose Blue Hamster Manufacturing Inc. is evaluating a proposed capital budgeting project (project Beta) that will require an initial Investment of $2,750,000. The project is expected to generate the following net cash flows: Year Year 1 Year 2 Year 3 Year 4 Cash Flow $325,000 $475,000 $500,000 $400,000 Blue Hamster Manufacturing Inc.'s weighted average cost of capital is 7%, and project Beta has the same risk as the firm's average...
CAPITAL BUDGETING CRITERIA A firm with a 14% WACC is evaluating two projects for this year's...
CAPITAL BUDGETING CRITERIA 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 5 Project M Project N - $30,000 $10,000 $10,000 $10,000 $10,000 $10,000 $90,000 $28,000 $28,000 $28,000 $28,000 $28,000 a. 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...
1. The most popular capital budgeting techniques used in practice to evaluate and select projects are...
1. The most popular capital budgeting techniques used in practice to evaluate and select projects are payback period, Net Present Value (NPV), and Internal Rate of Return (IRR). 2. Payback period is the number of years required for a company to recover the initial investment cost. 3. Net Present Value (NPV) technique: NPV is found by subtracting a project’s initial cost of investment from the present value of its cash flows discounted using the firm’s weighted average cost of capital....
Suppose Blue Hamster Manufacturing Inc. is evaluating a proposed capital budgeting project (project Beta) that will...
Suppose Blue Hamster Manufacturing Inc. is evaluating a proposed capital budgeting project (project Beta) that will require an initial investment of $2,500,000. The project is expected to generate the following net cash flows: Cash Flow Year Year 1 $325,000 $500,000 Year 2 $475,000 Year 3 $500,000 4 Blue Hamster Manufacturing Inc.'s weighted average cost of capital is 10%, and project Beta has the same risk as the firm's average project. Based on the cash flows, what is project Beta's NPV?...
11.07 CAPITAL BUDGETING CRITERIA A firm with a 13% WACC is evaluating two projects for this...
11.07 CAPITAL BUDGETING CRITERIA A firm with a 13% 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...
6) A firm is evaluating three mutually exclusive capital budgeting projects. The net present value of each project is shown below. Given this information, which project() should the firm accept? Project 1 100,000 NPV, S Project 2 10,000 Project 3 - 100,000 a) accept Projects 1 and 2, and reject Project 3 b) accept Projects 1 and 3, and reject Project 2 c) accept Project 3, and reject Projects 1 and 2 d) accept Project 1, and reject Projects 2...
x fx Capital Budgeting Capital Budgeting Wenling Consulting Services is considering an eight year investment in two projects, A and B. Both projects will have Initial outlay, $120,000, and the terminal cash flow, $11,000. The annual after-tax operating cash flows are as follo 1 $ 3 4 5 6 7 $ $ $ $ $ Project A 31,000.00 28,700.00 23,440.00 23,200.00 21,000.00 19,900.00 18,900.00 16,500.00 $ $ $ $ $ $ $ 5 Project B 19,000.00 19,500.00 22,700.00 24,300.00 27,000.00...
Please use Excel to solve.
NPV and IRR for Mutually Exclusive Projects 10. A company is considering two mutually exclusive projects, A and B. Project A requires an initial investment of $200, followed by cash flows of $185, $40, and $15. Project B requires an initial investment of $200, followed by cash flows of S0, $50, and $230. What is the NPV and IRR for each of the projects? Which project should the company choose? The firm's cost of capital...
Thomas Company is considering two mutually exclusive projects. The firm has a 12% cost of capital. Cash inflows Initial investment Year 1 Year 2 Year 3 Year 4 Year 5 Project A Project B $130000 $85000 $25000 $35000 $45000 $50000 $55000 $40000 $35000 $30000 $10000 $5000 Evaluate and discuss the rankings of NPV and IRR of the two projects on the basis of your finding. O A Project B should be chosen because it has a higher IRR than Project...
Ch 11: Assignment - The Basics of Capital Budgeting OX Suppose Blue Hamster Manufacturing Inc. is evaluating a proposed capital budgeting project (project Beta) that will require an initial Investment of $2,750,000. The project is expected to generate the following net cash flows: Year Year 1 Year 2 Year 3 Year 4 Cash Flow $325,000 $475,000 $500,000 $400,000 Blue Hamster Manufacturing Inc.'s weighted average cost of capital is 7%, and project Beta has the same risk as the firm's average...
CAPITAL BUDGETING CRITERIA 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 5 Project M Project N - $30,000 $10,000 $10,000 $10,000 $10,000 $10,000 $90,000 $28,000 $28,000 $28,000 $28,000 $28,000 a. 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...
Suppose Blue Hamster Manufacturing Inc. is evaluating a proposed capital budgeting project (project Beta) that will require an initial investment of $2,500,000. The project is expected to generate the following net cash flows: Cash Flow Year Year 1 $325,000 $500,000 Year 2 $475,000 Year 3 $500,000 4 Blue Hamster Manufacturing Inc.'s weighted average cost of capital is 10%, and project Beta has the same risk as the firm's average project. Based on the cash flows, what is project Beta's NPV?...
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