Homework Answers
rate positively .. let me know if you need any clarification
correct answer is option = d) Accept project 3 and reject project 1 and 2
Because IRR is lower than required rate for project 1 and 2
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A firm with a cost of capital of 13 percent is evaluating three capital projects. The...
31 A tem with a cost of capital of 13 percent is evaluating three capital projects....
31
A tem with a cost of capital of 13 percent is evaluating three capital projects. The internal rates of retum are as follows: Internal Rate Project of Return 112 2 11% 315 The should OA Prt 2.andrej - ceptre, and Projects 2 and 3 OC. accept Project 2, and reject Projects 1 and 3 OD. coept Project 3, and roject Projects 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...
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...
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...
Intro Your company is evaluating two projects and has collected the following information: Expected return (IRR)...
Intro Your company is evaluating two projects and has collected the following information: Expected return (IRR) Project A 12% Same as existing business Project B 7% Same as existing business Risk Equity Long-term debt Suggested source of financing After-tax cost of financing 17% 5% The company currently has a capital structure consisting of 50% equity and 50% long-term debt. 18 Attempt 1/5 for 10 pts. Part 1 Without doing any calculations, what should the company do and why? Look for...
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...
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:
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....
Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown below....
Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown below. The required rate of return on projects of both of their risk class is 11 percent, and that the maximum allowable payback and discounted payback statistic for the projects are 2 and 3 years, respectively. 0 3 8000 1 28.000 2 48.000 19.000 Time: Project A Cash Flow Project B Cash Flow -48,000 28,000 2,000 68,000 Use the payback decision rule to evaluate these...
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...
31
A tem with a cost of capital of 13 percent is evaluating three capital projects. The internal rates of retum are as follows: Internal Rate Project of Return 112 2 11% 315 The should OA Prt 2.andrej - ceptre, and Projects 2 and 3 OC. accept Project 2, and reject Projects 1 and 3 OD. coept Project 3, and roject Projects 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...
Intro Your company is evaluating two projects and has collected the following information: Expected return (IRR) Project A 12% Same as existing business Project B 7% Same as existing business Risk Equity Long-term debt Suggested source of financing After-tax cost of financing 17% 5% The company currently has a capital structure consisting of 50% equity and 50% long-term debt. 18 Attempt 1/5 for 10 pts. Part 1 Without doing any calculations, what should the company do and why? Look for...
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....
Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown below. The required rate of return on projects of both of their risk class is 11 percent, and that the maximum allowable payback and discounted payback statistic for the projects are 2 and 3 years, respectively. 0 3 8000 1 28.000 2 48.000 19.000 Time: Project A Cash Flow Project B Cash Flow -48,000 28,000 2,000 68,000 Use the payback decision rule to evaluate these...
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...
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