When choosing among mutually exclusive projects we choose the project with the highest NPV. True or...
When choosing among mutually exclusive projects we choose the project with the highest NPV. True or False
Homework Answers
True,
NPV or Net present value is the present value of cash inflows minus cash outflow, it represents how much cash inflow is left after the intital investment cost is taken into consideration, so the higher the NPV, the better the project.
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When choosing among mutually exclusive projects we choose the
project with the highest NPV. True or...
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...
If Wise Guy Inc is choosing one of the above mutually exclusive projects (Project A or Project B)
If Wise Guy Inc is choosing one of the above mutually exclusive projects (Project A or Project B), given a discount rate of 7%, which should the company choose?
For two mutually exclusive projects the project with the higher IRR is the correct selection. True...
For two mutually exclusive projects the project with the higher IRR is the correct selection. True or False
If a company must choose between two mutually exclusive investment projects, the best general method to...
If a company must choose between two mutually exclusive investment projects, the best general method to employ for decision-making purposes is: Cash-flow bailout Cash-flow break-even Net Present value (NPV) Discounted payback Accounting (book) rate of return, based on average investment over the life of each project The profitability index (PI) is calculated as: Net present value (NPV) divided by average investment New present value (NPV) divided by initial investment Average investment divided by net present value (NPV) Initial investment divided...
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...
All the mutually exclusive projects need to be ranked with only the best project accepted. True...
All the mutually exclusive projects need to be ranked with only the best project accepted. True False true correct?
(Mutually exclusive projects and NPV) You have been assigned the task of evaluating two mutually exclusive...
(Mutually exclusive projects and NPV) You have been assigned the task of evaluating two mutually exclusive projects with the following projected cash flows: Year Project A Project B Cash Flow Cash Flow $(102,000) $(102,000) 40,000 40.000 40.000 40,000 0 40,000 215,000 If the appropriate discount rate on these projects is 9 percent, which would be chosen and why? The NPV of Project Ass (Round to the nearest cont.)
You are evaluating two mutually exclusive projects. Project 1 has an NPV of $3000 and an...
You are evaluating two mutually exclusive projects. Project 1 has an NPV of $3000 and an IRR of 15%. Project 2 has expected cash flows of - $22,477 in year 0, $14,236 in year 1, $11,904 in year 2 and $10,013 in year 3. If there is a required rate of 10% on both projects, what is the Net Present Value of Project 2? (Think about but do not answer on line; which project would you choose?
You are analyzing two mutually exclusive projects. NPV IRR Project A $10,000 18% Project...
You are analyzing two mutually exclusive projects. NPV IRR Project A $10,000 18% Project B $18,100 13% Which project do you recommend? Defend your answer as to why you recommended the particular project and specifically list what assumptions you used to justify the particular decision. In addition, what other factors should you consider when evaluating the above projects?
Question 2 (1 point) 1. Conflicts between two mutually exclusive projects, where the NPV method chooses...
Question 2 (1 point) 1. Conflicts between two mutually exclusive projects, where the NPV method chooses one project but the IRR method chooses the other, should generally be resolved in favor of the project with the higher NPV. 5 True False Question 3 (1 point) If a project's NPV is negative, then its payback must be longer that its economic life True False
If Wise Guy Inc is choosing one of the above mutually exclusive projects (Project A or Project B), given a discount rate of 7%, which should the company choose?
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...
(Mutually exclusive projects and NPV) You have been assigned the task of evaluating two mutually exclusive projects with the following projected cash flows: Year Project A Project B Cash Flow Cash Flow $(102,000) $(102,000) 40,000 40.000 40.000 40,000 0 40,000 215,000 If the appropriate discount rate on these projects is 9 percent, which would be chosen and why? The NPV of Project Ass (Round to the nearest cont.)
You are evaluating two mutually exclusive projects. Project 1 has an NPV of $3000 and an IRR of 15%. Project 2 has expected cash flows of - $22,477 in year 0, $14,236 in year 1, $11,904 in year 2 and $10,013 in year 3. If there is a required rate of 10% on both projects, what is the Net Present Value of Project 2? (Think about but do not answer on line; which project would you choose?
Question 2 (1 point) 1. Conflicts between two mutually exclusive projects, where the NPV method chooses one project but the IRR method chooses the other, should generally be resolved in favor of the project with the higher NPV. 5 True False Question 3 (1 point) If a project's NPV is negative, then its payback must be longer that its economic life True False
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