Question

Course Schedue. Someday.co. LULOOR TWICE Mina MURE.. Question 11 1 pts Given the following cash flows for two independent projects, and a required rate of return of 12%, which of the following statements is correct? Year Project A Project B -96,000 -93,000 1 2.400 73,000 2 4,800 48.000 3 78,000 4,800 84,000 4.800 0 4 Because of time disparity, IRR indicates that Project A is better, but NPV indicates that Project Bis better. Time/size disparity is not a concern in this scénario. Both projects should be accepted. Because of size disparity, IRR indicates that Project B is better, but NPV indicates that Project A is better. Because of time disparity, IRR indicates that Project B is better, but NPV indicates that Project Ais better. Because of size disparity, IRR indicates that Project A is better, but NPV indicates that Project Bis better.

Answer 1

2 year Nm B8 fx =IRR(B3:37) А B с D E F 1 Project A Cash flows pv@12% Present value 0 $ (96,000) 1.0000 $ (96,000.00) 4 1 $ 2,400 0.8929 $ 2,142.86 5 2 $ 4,800 0.7972 $ 3,826.53 6 3 $ 78,000 0.7118 $ 55,518.86 7 4 $ 84,000 0.6355 $ 53,383.52 8 IRR 18.10%||NPV $ 18,871.77 9 10 Project B Cash flows pv@12% Present value 12 0 $ (93,000) 1.0000 $ (93,000.00) 13 1 $ 73,000 0.8929 $ 65,178.57 14 2 $ 48,000 0.7972 $ 38,265.31 15 3 $ 4,800 0.7118$ 3,416.55 16 4 $ 4,800 0.6355 $ 3,050.49 17 IRR 25.51% NPV $ 16,910.91 18 19 Both Projects should be accepted beause of independent Projects. 20 Time/Size disparity is not a concern in this scenario. Both Projects should be accepted. 11 year 21

B8 fx =IRR(B3:37) A B С D 1 Project A 2 year 30 4 1 Cash flows -96000 2400 4800 78000 52 pv@12% 1 =C3/1.12 =C4/1.12 =C5/1.12 =C6/1.12 NPV Present value =B3*C3 =B4*C4 =B5*C5 =B6 C6 =B7*C7 =SUM(D3:07) 6 3 74 84000 |=IRR(B3:37) 8 IRR 9 10 Project B 11 year 12 0 Present value Cash flows |-93000 13 1 73000 14 2 48000 pv@12% 1 =C12/1.12 I=C13/1.12 =C14/1.12 I=C15/1.12 NPV =B12*C12 =B13*C13 =B14*C14 =B15*C15 =B16*C16 I-SUM(D12:016) 15 3 4800 16 4 |4800 =IRR(B12:B16) 17 IRR 18