Homework Answers
As per rules I am answering the first 4 subparts of the question
| A | B | ||
| 1 | Payback | 3.25 | 2.5 |
| 2 | IRR | 10.48% | 12.04% |
| 3 | NPV-Accept A | 283.26 | 268.08 |
| 4 | NPV-Accept B | -68.59 | 1.20 |
| Year | A | Cumulative CF | B | Cumulative CF |
| 0 | -2000 | -2000 | -2000 | -2000 |
| 1 | 500 | -1500 | 950 | -1050 |
| 2 | 600 | -900 | 850 | -200 |
| 3 | 700 | -200 | 400 | 200 |
| 4 | 800 | 600 | 300 | 500 |
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CH. 9 WORKSHEET NPV and Other Investment Criteria For Problems 1-4, use a 5% discount rate...
NPV and Uher nvestment CrNErTa For Problems 1-4, use a 5% discount rate and the following...
NPV and Uher nvestment CrNErTa For Problems 1-4, use a 5% discount rate and the following cash flows for projects A and B.: A: (-$2000, $500, $600, $700, $800) B: -$2000, $950, $850, $400, $300) 3. If A and B are mutually exclusive and the required rate of return is 5%, which should be ассеpted? 4. If the discount rate is 12%, and A and B are mutually exclusive, which project should be ассеpted? You can borrow $8,000, to be...
Remember to explain all your steps and to show all formulas you use before you put...
Remember to explain all your steps and to show all formulas you
use before you put numbers into the equations.
-Write the formula, substitute the numbers into the formula, say
what is left to compute, compute
. Question 1 For question 1, use the following cash flows for projects A and B: A: (-$2,000, $500, $600, $700, $800) B: (-$2,000, $950, $850, $400, $300) AB. (1.1) Calculate the payback period for projects A and B. (1.2) If the discount rate...
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.
1. Calculate the net present value (NPV) for both projects, and determine which project should be...
1. Calculate the net present
value (NPV) for both projects, and determine which project should
be accepted based on NPV. Round both NPVs to the nearest
dollar.
2. Calculate the internal rate of return (IRR) for both
projects, and determine which project should be accepted based on
IRR.
3. Calculate the net present value (NPV) for both projects using
the crossover rate as your discount rate. Round both NPVs to the
nearest dollar.
Please show all work. Thank you.
Use...
1. The time value of money refers to the fact that money has an opportunity cost,...
1. The time value of money refers to the fact that money has an opportunity cost, i.e., its reinvestment rate. a. True b. False 2. If the payback period is used as the criterion for assigning priorities to investment projects, the highest priority will be assigned to projects with the shortest payback period. a. True b. False 3. The _______________ is the discount rate that makes the present value of the benefits generated by a project equal to the investment....
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...
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,...
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)...
We have two independent and mutually exclusive projects, A and B. Project A requires an initial...
We have two independent and mutually exclusive projects, A and B. Project A requires an initial investment of $1000, and will yield $500 of cash inflows for the next three years. Project B requires an initial investment of $3,500, and will yield $1,000 of cash inflows for the next five years. The required return on both projects is 10%. The NPV of Project A is 243.43 The NPV of Project B is 291.00 What is the problem with using the...
Please help me solve 4-8 Use the following table to answer questions 1 – 6. The...
Please help me solve 4-8
Use the following table to answer questions 1 – 6. The wacc is 10% for all projects in this table. Year Project A -1,000 1,000 Project B -1,000 300 400 500 600 Project C -1,000 550 450 350 250 Project D -1,000 600 800 1. Compute the Net Present Value (NPV), Internal Rate of Return (IRR), Profitability Index (PI), and Payback Period (PB) for each project: Project A Project B Project C Project D WACC...
Mastery Problem: Net Present Value and Internal Rate of Return Part One Companies use capital investment...
Mastery Problem: Net Present Value and Internal Rate of Return Part One Companies use capital investment analysis to evaluate long-term investments. Capital investment evaluation methods that use present values are (1) Net present value method (NPV) and (2) Internal rate of return (IRR) method. Methods That Use Present Values Of the two capital investment evaluation methods, a defining characteristic NPV and IRR is that they consider the time value of money. This means that money tomorrow is worth less than money today....
NPV and Uher nvestment CrNErTa For Problems 1-4, use a 5% discount rate and the following cash flows for projects A and B.: A: (-$2000, $500, $600, $700, $800) B: -$2000, $950, $850, $400, $300) 3. If A and B are mutually exclusive and the required rate of return is 5%, which should be ассеpted? 4. If the discount rate is 12%, and A and B are mutually exclusive, which project should be ассеpted? You can borrow $8,000, to be...
Remember to explain all your steps and to show all formulas you
use before you put numbers into the equations.
-Write the formula, substitute the numbers into the formula, say
what is left to compute, compute
. Question 1 For question 1, use the following cash flows for projects A and B: A: (-$2,000, $500, $600, $700, $800) B: (-$2,000, $950, $850, $400, $300) AB. (1.1) Calculate the payback period for projects A and B. (1.2) If the discount rate...
1. Calculate the net present
value (NPV) for both projects, and determine which project should
be accepted based on NPV. Round both NPVs to the nearest
dollar.
2. Calculate the internal rate of return (IRR) for both
projects, and determine which project should be accepted based on
IRR.
3. Calculate the net present value (NPV) for both projects using
the crossover rate as your discount rate. Round both NPVs to the
nearest dollar.
Please show all work. Thank you.
Use...
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...
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)...
Please help me solve 4-8
Use the following table to answer questions 1 – 6. The wacc is 10% for all projects in this table. Year Project A -1,000 1,000 Project B -1,000 300 400 500 600 Project C -1,000 550 450 350 250 Project D -1,000 600 800 1. Compute the Net Present Value (NPV), Internal Rate of Return (IRR), Profitability Index (PI), and Payback Period (PB) for each project: Project A Project B Project C Project D WACC...
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