Homework Answers
please find below the solution.. let me know if you need any clarification..
| ans 6 | Correct answer is option | ||||||||
| b. Use NPV always | |||||||||
| NPV is superior compared to IRR. IRR may provide two outcome and assumption | |||||||||
| of reinvestment rate is also a dis advantage. | |||||||||
| ans 7 | Correct answer is option | ||||||||
| b. The nominal interest rate | |||||||||
| since the cash flow are not real $ or inflation adjusted therefore nomial rate should be used. | |||||||||
Add Answer to:
6. If IRR and NPV give different answers a. use IRR always b. use NPV always...
6. If IRR and NPV give different answers, you should to discount future cash a. use...
6. If IRR and NPV give different answers, you should to discount future cash a. use IRR always b. use NPV always c. Use IRR if mutually exclusive projects d. use IRR if independent projects 7. If you are expressing all cash flows in future dollars, you use the The Innominal restro a. The IRR interest rate b. The nominal interest rate c. The real interest rate d. The corrected interest rate multiple assumptions to see how it affects NPV...
Which of the following is true about comparing NPV and IRR rule? (a) NPV is strictly...
Which of the following is true about comparing NPV and IRR rule? (a) NPV is strictly better than IRR so no CFO or CEO in the real world actually uses IRR. (b) No matter what the cash flow patterns are, with unlimited resources and same project lives, we can always choose the one with highest NPV among mutually exclusive projects. (c)When mutually exclusive projects have different lives, we should use IRR rather than NPV rule. (d) NPV rule guarantees correct...
First Blank: always, sometimes, never Second Blank: IRR, MIRR, required rate of return Third Blank: IRR,...
First Blank: always, sometimes, never
Second Blank: IRR, MIRR, required rate of return
Third Blank: IRR, MIRR, required rate of return
Fourth Blank: IRR method, NPV method
6. Understanding the NPV profile If projects are mutually exclusive, only one project can be chosen. The internal rate of return (IRR) and the net present value (NPV) methods will not always choose the same project. If the crossover rate on the NPV profile is below the horizontal axis, the methods will agree....
The reason is the NPV and IRR approaches use different reinvestment rate assumptions so there can...
The reason is the NPV and IRR approaches use different reinvestment rate assumptions so there can be a conflict in project acceptance when mutually exclusive projects are considered. v approach should be used for the Reinvestment at the WACC is the superior assumption, so when mutually exclusive projects are evaluated the NPV capital budgeting decision.
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...
Calculating IRR and NPV
(Calculating IRR and NPV) (Related to Checkpoint 11.1 on page 367 and Checkpoint 11.4 on page 376) The cash flows for three independent projects are as follows:a. Calculate the IRR for each of the projects.b. If the discount rate for all three projects is 10 percent, which project or projects would you want to undertake?c. What is the NPV of each of the projects where the appropriate discount rate is 10 percent? 20 percent?
Capital Budgeting Decision Criteria: IRR IRR A project's internal rate of return (IRR) is the -Select-compound...
Capital Budgeting Decision Criteria: IRR IRR A project's internal rate of return (IRR) is the -Select-compound ratediscount raterisk-free rateCorrect 1 of Item 1 that forces the PV of its inflows to equal its cost. The IRR is an estimate of the project's rate of return, and it is comparable to the -Select-YTMcoupongainCorrect 2 of Item 1 on a bond. The equation for calculating the IRR is: CFt is the expected cash flow in Period t and cash outflows are treated...
If the projects were independent, which project(s) would be accepted according to the IRR method? a)...
If the projects were independent, which project(s) would be
accepted according to the IRR method?
a) Neither
b) Project A
c) Project B
d) Both Projects A or B
If the projects were mutually exclusive, which project(s) would
be accepted according to the IRR method?
a) Neither
b) Project A
c) Project B
d) Both Projects A or B
The reason is
a) TheNPV and IRR approaches use the same reinvestment rate
assumption and so both approaches reach the same...
Dropdown options first 2 blanks: (internal rate of return IRR, required rate of return, modified internal...
Dropdown options first 2 blanks: (internal rate of return IRR,
required rate of return, modified internal rate of return MIRR)
Dropdown options 3rd blank: (NPV method, IRR method)
If projects are mutually exclusive, only one project can be chosen. The internal rate of return (IRR) and the net present value (NPV) methods will not always choose the same project. If the crossover rate on the NPV profile is below the horizontal axis, the methods will agree. always Projects Y and...
1. A. Which of the following mutually exclusive projects should be accepted? Project NPV Payback IRR...
1. A. Which of the following mutually exclusive projects should be accepted? Project NPV Payback IRR A +42,176 2 years, +$10,500 16.4% B +39,090 2 years, +9,670 15.8% C +41,894 3 years, +16,620 13.2% D +43,778 3 years, +11,625 14.9% E +38,952 2 years, +15,475 15.9% B. What is the Payback Period of a project with an initial cost of $75,000, Year 1 cash flow of $20,000 which increases by 5% each year? If the Payback cutoff is 3 years,...
6. If IRR and NPV give different answers, you should to discount future cash a. use IRR always b. use NPV always c. Use IRR if mutually exclusive projects d. use IRR if independent projects 7. If you are expressing all cash flows in future dollars, you use the The Innominal restro a. The IRR interest rate b. The nominal interest rate c. The real interest rate d. The corrected interest rate multiple assumptions to see how it affects NPV...
First Blank: always, sometimes, never
Second Blank: IRR, MIRR, required rate of return
Third Blank: IRR, MIRR, required rate of return
Fourth Blank: IRR method, NPV method
6. Understanding the NPV profile If projects are mutually exclusive, only one project can be chosen. The internal rate of return (IRR) and the net present value (NPV) methods will not always choose the same project. If the crossover rate on the NPV profile is below the horizontal axis, the methods will agree....
The reason is the NPV and IRR approaches use different reinvestment rate assumptions so there can be a conflict in project acceptance when mutually exclusive projects are considered. v approach should be used for the Reinvestment at the WACC is the superior assumption, so when mutually exclusive projects are evaluated the NPV capital budgeting decision.
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...
If the projects were independent, which project(s) would be
accepted according to the IRR method?
a) Neither
b) Project A
c) Project B
d) Both Projects A or B
If the projects were mutually exclusive, which project(s) would
be accepted according to the IRR method?
a) Neither
b) Project A
c) Project B
d) Both Projects A or B
The reason is
a) TheNPV and IRR approaches use the same reinvestment rate
assumption and so both approaches reach the same...
Dropdown options first 2 blanks: (internal rate of return IRR,
required rate of return, modified internal rate of return MIRR)
Dropdown options 3rd blank: (NPV method, IRR method)
If projects are mutually exclusive, only one project can be chosen. The internal rate of return (IRR) and the net present value (NPV) methods will not always choose the same project. If the crossover rate on the NPV profile is below the horizontal axis, the methods will agree. always Projects Y and...
Most questions answered within 3 hours.
-
Problem 1: Present entries to record the selected transactions
described below:
(a)
Issued $2,790,000 of 5-year,...
asked 3 minutes ago -
Using technology to support HR activities increases:
a.
the efficiency of the administrative HR functions.
b....
asked 4 minutes ago -
1. List the features used to classify leaf
types.
2. List some characteristics that are shared...
asked 9 minutes ago -
The three elements of Value Proposition, Key Customers, and
Capabilities operate within an environment. Which of...
asked 11 minutes ago -
Katelynn, a physician, earns $200,000 from her medical practice
in the current year. She receives $45,000...
asked 19 minutes ago -
Each row of the table below describes an aqueous solution at
25°C
.
The second column...
asked 23 minutes ago -
A horizontal wire is at y = 0. Current travels in the +x
direction. The magnetic...
asked 24 minutes ago -
Let X be a continuous random variable whose PDF is Let X be a
continuous random...
asked 45 minutes ago -
Martinez Company’s relevant range of production is 7,500 units
to 12,500 units. When it produces and...
asked 43 minutes ago -
A football with a mass of 1.2 kg is kicked from ground level to
a height...
asked 49 minutes ago -
Remember: Changes in supply determinants shift supply, and
changes in demand determinants shift demand. We say...
asked 47 minutes ago -
Why is the answer b), for this question? I came up with C) for
my incorrect...
asked 53 minutes ago