Homework Answers
As Per IRR decision rule a Project should be accepted if the IRR is more than Cost of Capital.
Project 1 IRR 12% < Cost of Capital 13% - Reject
Project 2 IRR 11% < Cost of Capital 13% - Reject
Project 3 IRR 15% > Cost of Capital 13% - Accept
Answer D
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A tem with a cost of capital of 13 percent is evaluating three capital projects....
A firm with a cost of capital of 13 percent is evaluating three capital projects. The...
A firm with a cost of capital of 13 percent is evaluating three capital projects. The internal rates of return are as folows: Internal Rate Project of Return 1 12% 2 11% 315% The firm should O A. accept Project 1 and reject Projects 2 and 3 OB. accept Project 2 and reject Projects 1 and 3 OC. accept Project 1 and 2 and reject Project 3 OD. accept Project 3, and reject Projects 1 and 2
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...
Please respond to both pictures asap. I will THUMBS UP within the hour. 11 12 The...
Please respond to both pictures asap. I will THUMBS UP within the
hour.
11
12
The net present values for 3 projects are as follows: Project NPV 1 $4500 2 - $110 3 $400 The firm should O A accept Project 3, and reject Projects 1 and 2 OB accept Projects 1 and 3, and reject Project 2 OC.nocopt Projects 1 and 2, and roject Project 3 OD accept all projects Cheless inc. has issued cumulative preferred stock with a...
Crane Corp. management is evaluating two mutually exclusive projects. The cost of capital is 15 percent....
Crane Corp. management is evaluating two mutually exclusive projects. The cost of capital is 15 percent. Costs and cash flows for each project are given in the following table. Year Project 1 Project 2 0 -$1,266,858 -$1,100,968 1 256,000 319,000 2 318,000 319,000 3 480,000 319,000 4 483,000 319,000 5 773,000 319,000 NPV of project 1 is$ NPV of project 2 is$ IRR of project 1 is % IRR of project 2 is % Crane Corp should accept:
You are evaluating the following mutually exclusive projects for your firm, whose cost of capital is...
You are evaluating the following mutually exclusive projects for your firm, whose cost of capital is 14%, and all dollar amounts are in millions. 1. Verify the NPV and IRR of each project. 2. What is your recommendation? Project Required Return Life IO NCF1-n NPV IRR Alpha 12% 10 years $50 $20 $63 38.45% Beta 8% 5 $50 $25 $49.82 41.04% EAABeta = $12.48 million > EAAAlpha = $11.15 million so Accept B and Reject A Is the answer- Please...
Crane Corp. management is evaluating two mutually exclusive projects. The cost of capital is 15 percent....
Crane Corp. management is evaluating two mutually exclusive projects. The cost of capital is 15 percent. Costs and cash flows for each project are given in the following table. Year Project 1 Project 2 0 $1,190,556 -$1,107,928 225,000 315,000 315,000 315,000 405,000 315,000 450,000 315,000 675,000 315,000 Calculate NPV and IRR of two projects. (Enter negative amounts using negative sign, e.g. -45.25. Do not round discount factors. Round other intermediate calculations and final answer to O decimal places, e.. 1,525....
CAPITAL BUDGETING CRITERIA 1. A firm with a 13% WACC is evaluating two projects for this...
CAPITAL BUDGETING CRITERIA 1. 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 -$18,000 $6,000 $6,000 $6,000 $6,000 $6,000 Project N -$54,000 $16,800 $16,800 $16,800 $16,800 $16,800 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 to...
4. Net present value method Underwood Corp. is evaluating a proposed capital budgeting project that will...
4. Net present value method Underwood Corp. is evaluating a proposed capital budgeting project that will require an initial investment of $168,000. The project is expected to generate the following net cash flows: Year AW N< 2 Cash Flow $44,800 $51,700 $48,600 $47,900 Assume the desired rate of return on a project of this type is 11%. The net present value of this project is -25,096.03 r projects. Should Underwood Suppose Underwood Corp. has enough capital to fund the project,...
Suppose Lumbering Ox Truckmakers is evaluating a proposed capital budgeting project (project Alpha) that will require...
Suppose Lumbering Ox Truckmakers is evaluating a proposed capital budgeting project (project Alpha) that will require an initial investment of $550,000. The project is expected to generate the following net cash flows: Year Year 1 Year 2 Year 3 Cash Flow $375,000 $425,000 $500,000 Year 4 $400,000 The company's weighted average cost of capital is 8%, and project Alpha has the same risk as the firm's average project. Based on the cash flows, what is project Alpha's net present value...
Suppose Celestial Crane Cosmetics is evaluating a proposed capital budgeting project (project Alpha) that will require...
Suppose Celestial Crane Cosmetics is evaluating a proposed capital budgeting project (project Alpha) that will require an initial investment of $450,000. The project is expected to generate the following net cash flows: Year Cash Flow Year 1 Year 2 Year 3 Year 4 $325,000 $500,000 $475,000 $400,000 Celestial Crane Cosmetics's weighted average cost of capital is 9%, and project Alpha has the same risk as the firm's average project. Based on the cash flows, what is project Alpha's net present...
A firm with a cost of capital of 13 percent is evaluating three capital projects. The internal rates of return are as folows: Internal Rate Project of Return 1 12% 2 11% 315% The firm should O A. accept Project 1 and reject Projects 2 and 3 OB. accept Project 2 and reject Projects 1 and 3 OC. accept Project 1 and 2 and reject Project 3 OD. accept Project 3, and reject Projects 1 and 2
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...
Please respond to both pictures asap. I will THUMBS UP within the
hour.
11
12
The net present values for 3 projects are as follows: Project NPV 1 $4500 2 - $110 3 $400 The firm should O A accept Project 3, and reject Projects 1 and 2 OB accept Projects 1 and 3, and reject Project 2 OC.nocopt Projects 1 and 2, and roject Project 3 OD accept all projects Cheless inc. has issued cumulative preferred stock with a...
Crane Corp. management is evaluating two mutually exclusive projects. The cost of capital is 15 percent. Costs and cash flows for each project are given in the following table. Year Project 1 Project 2 0 $1,190,556 -$1,107,928 225,000 315,000 315,000 315,000 405,000 315,000 450,000 315,000 675,000 315,000 Calculate NPV and IRR of two projects. (Enter negative amounts using negative sign, e.g. -45.25. Do not round discount factors. Round other intermediate calculations and final answer to O decimal places, e.. 1,525....
4. Net present value method Underwood Corp. is evaluating a proposed capital budgeting project that will require an initial investment of $168,000. The project is expected to generate the following net cash flows: Year AW N< 2 Cash Flow $44,800 $51,700 $48,600 $47,900 Assume the desired rate of return on a project of this type is 11%. The net present value of this project is -25,096.03 r projects. Should Underwood Suppose Underwood Corp. has enough capital to fund the project,...
Suppose Lumbering Ox Truckmakers is evaluating a proposed capital budgeting project (project Alpha) that will require an initial investment of $550,000. The project is expected to generate the following net cash flows: Year Year 1 Year 2 Year 3 Cash Flow $375,000 $425,000 $500,000 Year 4 $400,000 The company's weighted average cost of capital is 8%, and project Alpha has the same risk as the firm's average project. Based on the cash flows, what is project Alpha's net present value...
Suppose Celestial Crane Cosmetics is evaluating a proposed capital budgeting project (project Alpha) that will require an initial investment of $450,000. The project is expected to generate the following net cash flows: Year Cash Flow Year 1 Year 2 Year 3 Year 4 $325,000 $500,000 $475,000 $400,000 Celestial Crane Cosmetics's weighted average cost of capital is 9%, and project Alpha has the same risk as the firm's average project. Based on the cash flows, what is project Alpha's net present...
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