There are two projects under consideration by the Rainbow factory. Each of the projects will require...
There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment of $34,000 and is expected to generate the following cash flows:
| First Year | Second Year | Third Year | Total | |
| Alpha Project | $32,500 | $23,000 | $4,500 | $60,000 |
| Beta Project | 7,500 | 24,000 | 28,500 | 60,000 |
(Click here to see present value and future value tables)
A. If the discount rate is 15%, compute the NPV of each project. Round your present value factor to three decimal places and final answer to answer to 2 decimal places.
| Alpha Project | $ |
| Beta Project | $ |
B. Which project should be recommended.
.
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There are two projects under consideration by the Rainbow
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A firm evaluates all of its projects by applying the NPV decision rule. A project under consideration has the following cash flows: Year Cash Flow -$34,000 15,000 17,000 13,000 What is the NPV of the project if the required return is 11 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NPV At a required return of 11 percent, should the firm accept this project? Yes O No What is the NPV of...
A firm evaluates all of its projects by applying the IRR rule. A project under consideration has the following cash flows: Year 0 1 Cash Flow -$34,000 15,000 17,000 13,000 WN- If the required return is 14 percent, what is the IRR for this project? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) IRR I % Should the firm accept the project? Accept Reject
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