Homework Answers
Jose should accept project B because it has higher NPV than project A
because higher the NPV, higher it adds to the value of the firm or the investor's wealth.
the above is answer..
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Jose is analyzing two mutually exclusive projects of similar size and has prepared the following data....
Isaac has analyzed two mutually exclusive projects that have 3-year lives. Project A has an NPV...
Isaac has analyzed two mutually exclusive projects that have 3-year lives. Project A has an NPV of $81,406, a payback period of 2.48 years, and an IRR of 9.31 percent. Project B has an NPV of $82,909, a payback period of 2.57 years, and an IRR of 9.22 percent. The firm’s cost of capital is 9.15 percent and required payback period is 2.8 years. Isaac must make a recommendation and justify it in 15 words or less. What should his...
A firm is considering two mutually exclusive projects with equal lives, Project A has an NPV...
A firm is considering two mutually exclusive projects with equal lives, Project A has an NPV of $100,000, an IRR of 12%, and a payback period of 3.1 years. Project B has an NPV of $120,000, an IRR of 14%, and a payback period of 2.8 years. The firm should choose________. Question 34 options: 1) Project A because its NPV is higher than Project B's 2) Project A because its payback period is longer than Project B's 3) Project B...
Net present value: is the best method of analyzing mutually exclusive projects. is less useful than...
Net present value: is the best method of analyzing mutually exclusive projects. is less useful than the internal rate of return when comparing different sized projects. is the easiest method of evaluation for non-financial managers to use. is less useful than the profitability index when comparing mutually exclusive projects. is very similar in its methodology to the average accounting return.
4. You Corp, is analyzing two mutually exclusive projects. The free cash flows associated with these...
4. You Corp, is analyzing two mutually exclusive projects. The free cash flows associated with these projects are as follows. Year Cash Flows Cash Flows -50,000 -50,000 15,625 15,625 15,625 15,625 15,625 100,000 The required rate of return on these projects is 10% A) What s each project's payback period? B) What is each project's NPV? C) What is each project's IRR? D) Which project should be accepted? Why?
VDSL Company has two mutually exclusive projects. Below is a table representing the initial investment and...
VDSL Company has two mutually exclusive projects. Below is a table representing the initial investment and cash flows for these projects over four (4) years. Project A Project B Year Cash Flow Cash Flow $ $ 0 -750,000 -750,000 1 250,000 200,000 2 350,000 400,000 3 250,000 100,000 4 200,000 175,000 a. If the company’s required rate of return is 8%, calculate the Profitability Index of each project and determine which project is the best investment. b. If the company...
Year Kaleb Konstruction, Inc., has the following mutually exclusive projects available. The company has historically used...
Year Kaleb Konstruction, Inc., has the following mutually exclusive projects available. The company has historically used a three-year cutoff for projects. The required return is 14 percent. Project F Project G -$ 138,000 -$ 208,000 58,500 38,500 51,500 53,500 61,500 91,500 56,500 121,500 51,500 136,500 1 2 3 4 5 a. Calculate the payback period for both projects. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Project F Project G Payback period years...
Capital Budgeting Example - NPV, IRR.You are analyzing the following two mutually exclusive projects, where Project...
Capital Budgeting Example - NPV, IRR.You are analyzing the following two mutually exclusive projects, where Project A is a 4-year project and Project B is a 3-year project: Project A Project B -$1,000 -$ 800 1 350 350 2 400 400 3 400 400 4 400 ----- Assuming a discount rate of 15%, calculate the net present values and internal rates of return for projects A and B.
(CHAPTER 9) Your boss is comparing 3 mutually exclusive projects with the following information: Your answer:...
(CHAPTER 9) Your boss is comparing 3 mutually exclusive projects with the following information: Your answer: Project #1 Project #2 Net Present Value $250 $310 Internal Rate of Return 12.53% 11.03% Profitability Index 2.50 1.80 Payback period 4.5 years 4.5 years The required payback period is 5 years. The required return is 9%. Project #3 $280 9.08% 1.01 2.6 years Which project would you recommend your boss to accept? (a) Project #1 (b) Project #2 (c) Project #3 (d) Projects...
With non-mutually exclusive projects. a. the payback method will select the best project. b. the net...
With non-mutually exclusive projects. a. the payback method will select the best project. b. the net present value is not acceptable. c. the internal rate of return method will always select the best project. d. the net present value and the internal rate of return methods will accept or reject the same project.
A company is analyzing two mutually exclusive projects, S and L, with the following cash flows:...
A company is analyzing two mutually exclusive projects, S and L, with the following cash flows: 2 3 Project S - $1,000 $890.56 $250 $10 $10 Project L - $1,000 $0 $250 $400 $799.39 The company's WACC is 8.0%. What is the IRR of the better project? (Hint: The better project may or may not be the one with the higher IRR.) Round your answer to two decimal places. %
4. You Corp, is analyzing two mutually exclusive projects. The free cash flows associated with these projects are as follows. Year Cash Flows Cash Flows -50,000 -50,000 15,625 15,625 15,625 15,625 15,625 100,000 The required rate of return on these projects is 10% A) What s each project's payback period? B) What is each project's NPV? C) What is each project's IRR? D) Which project should be accepted? Why?
Year Kaleb Konstruction, Inc., has the following mutually exclusive projects available. The company has historically used a three-year cutoff for projects. The required return is 14 percent. Project F Project G -$ 138,000 -$ 208,000 58,500 38,500 51,500 53,500 61,500 91,500 56,500 121,500 51,500 136,500 1 2 3 4 5 a. Calculate the payback period for both projects. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Project F Project G Payback period years...
(CHAPTER 9) Your boss is comparing 3 mutually exclusive projects with the following information: Your answer: Project #1 Project #2 Net Present Value $250 $310 Internal Rate of Return 12.53% 11.03% Profitability Index 2.50 1.80 Payback period 4.5 years 4.5 years The required payback period is 5 years. The required return is 9%. Project #3 $280 9.08% 1.01 2.6 years Which project would you recommend your boss to accept? (a) Project #1 (b) Project #2 (c) Project #3 (d) Projects...
A company is analyzing two mutually exclusive projects, S and L, with the following cash flows: 2 3 Project S - $1,000 $890.56 $250 $10 $10 Project L - $1,000 $0 $250 $400 $799.39 The company's WACC is 8.0%. What is the IRR of the better project? (Hint: The better project may or may not be the one with the higher IRR.) Round your answer to two decimal places. %
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