ZuoTi.Pro
Question

Consider the following cash flows of two mutually exclusive projects for a company. Assume the discount...

Consider the following cash flows of two mutually exclusive projects for a company. Assume the discount rate for the company is 10 percent. (5pts)

Year

A

B

0

-$1,400,000

-$600,000

1

900,000

300,000

2

800,000

500,000

3

700,000

400,000

a. Based on the payback period, which project should be taken?

b. Based on the NPV, which project should be taken?

c. Based on IRR, which project should be taken?

d. Based on this analysis, is incremental IRR analysis necessary? If yes, please conduct the analysis.

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

Cell reference -

Hope this will help, please do comment if you need any further explanation. Your feedback would be highly appreciated.

0 0
Add a comment
Know the answer?
Add Answer to:
Consider the following cash flows of two mutually exclusive projects for a company. Assume the discount...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • 18. Comparing Investment Criteria Consider the following cash flows of two mutually exclusive projects for Tokyo...

    18. Comparing Investment Criteria Consider the following cash flows of two mutually exclusive projects for Tokyo Rubber Company. Assume the discount rate for both projects is 8 percent. Year Dry Prepreg Solvent Prepreg -$1,700,000 1,100,000 900,000 --$750,000 375,000 600,000 390,000 750,000 a. Based on the payback period, which project should be taken? b. Based on the NPV, which project should be taken? c. Based on the IRR, which project should be taken? d. Based on this analysis, is incremental IRR...

  • 18. Comparing Inve 1. Comparing Investment Criteria Consider the following cash flows of two mutually! exclusive...

    18. Comparing Inve 1. Comparing Investment Criteria Consider the following cash flows of two mutually! exclusive projects for Tokyo Rubber Company. JCCS for Tokyo Rubber Company. Assume the discount rate for both proi ects is 8 percent. Year Dry Prepreg Solvent Prepreg -$1,500,000 900,000 700,000 725,000 -$650,000 345,000 570,000 360,000 a. Based on the payback period, which project should be taken? b. Based on the NPV, which project should be taken? c. Based on the IRR, which project should be...

  • Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC)....

    Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC). Both projects require an annual return of 18 percent. Year Deepwater Fishing New Submarine Ride 0 −$ 1,050,000 −$ 2,050,000 1 470,000 1,100,000 2 590,000 900,000 3 520,000 950,000 a-1. Compute the IRR for both projects. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) a-2. Based on the IRR, which project should you...

  • Chapter 5 Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation...

    Chapter 5 Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC). Both projects require an annual return of 17 percent. Fishing 0 -$1,020,000 $1,990,000 Ride 440,0001,040,000 566,000 490,000 3 890,000 Compute the IRR for both projects. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) a-1. IRR Deepwater Fishing Submarine Ride a-2. Based on the IRR, which project should you choose? O Deepwater Fishing...

  • please answer the complete question Consider the following cash flows on two mutually exclusive projects for...

    please answer the complete question Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation. Both projects require an annual return of 16 percent. Year Deepwater Fishing -$990,000 410.ee 542.000 460,000 New Submarine Ride $1,930.000 980.000 340. 830. 1 0-1. Compute the IRR for both projects. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g. 32.16.) Deepwater Fishing Submarine Ride a-2. Based on the IRR, which project...

  • need the NPV for both projects Consider the following cash flows on two mutually exclusive projects...

    need the NPV for both projects Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC). Both projects require an annual return of 16 percent Year 0 Deepwater Fishing -5995,000 415.000 546,000 465.000 New Submarine Ride -$1,940,000 990,000 845 000 840,000 a.1. Compute the IRR for both projects. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, ... 32.16.) IRR Deepwater Fishing Submarine Ride 19.94 % 18.57%...

  • Problem 7-13 NPV versus IRR Consider the following cash flows on two mutually exclusive projects for...

    Problem 7-13 NPV versus IRR Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation. Both projects require an annual return of 16 percent. Year Deepwater Fishing New Submarine Ride 0 −$ 990,000 −$ 1,930,000 1 410,000 980,000 2 542,000 840,000 3 460,000 830,000 a-1. Compute the IRR for both projects. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) IRR Deepwater Fishing % Submarine Ride...

  • 8.11 NPV versus IRR Consider the following cash flows on two mutually exclusive projects for the...

    8.11 NPV versus IRR Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC). Both projects require an annual return of 14 percent. Main Page Year Deepwater Fishing New Submarine Ride Incremental (Ride-Fishing) 0 $(850,000.00) $(1,650,000.00) $(800,000.00) 1 $320,000.00 $810,000.00 $490,000.00 2 $470,000.00 $750,000.00 $280,000.00 3 $410,000.00 $690,000.00 $280,000.00 Discount Rate IRR NPV As a financial analyst for BRC, you are asked the following questions: a. If your decision rule is to accept the...

  • Problem 5-11 NPV versus IRR Consider the following cash flows on two mutually exclusive projects for...

    Problem 5-11 NPV versus IRR Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC). Both projects require an annual return of 18 percent. Deepwater Fishing Year 0 New Submarine Ride 2,030,000 1,080,000 890,000 930,000 1,040,000 460.000 582,000 510,000 1 a-1. Compute the IRR for both projects. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Deepwater Fishing Submarine Ride a-2. Based on the...

  • Problem 7-13 NPV versus IRR Consider the following cash flows on two mutually exclusive projects for...

    Problem 7-13 NPV versus IRR Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation (BRC) Both projects require an annual return of 15 percent New Ride 950,000 Deepwater Submarine Fishing Year 0 -$975,000 $1,900,000 1 395,000 2 530,000 825,000 3 445,000 800,000 a-1. Compute the IRR for both projects. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places (e.g. 32.16)) IRR Deepwater Fishing Submarine Ride [ -...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT