You've estimated the following cash flows (in $ million) for two mutually exclusive projects: Year Project A Project...
You've estimated the following cash flows (in $ million) for two mutually exclusive projects:
| Year | Project A | Project B |
| 0 | -28 | -43 |
| 1 | 30 | 45 |
| 2 | 40 | 50 |
Part 1
What is the crossover rate, i.e., the discount rate at which both projects have the same NPV?
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You've estimated the following cash flows (in $ million) for two mutually exclusive projects: Year Project A Project...
Intro You've estimated the following cash flows (in $ million) for two mutually exclusive projects: Year...
Intro You've estimated the following cash flows (in $ million) for two mutually exclusive projects: Year Project A Project B 0 -28 -43 1 30 45 2 40 50 Attempt 1/5 for 10 pts. Part 1 What is the crossover rate, i.e., the discount rate at which both projects have the same NPV? The crossover rate is the discount rate at which both projects have the same NPV: NPV(A) = NPV(B) ⇔ NPV(A) - NPV(B) = 0 ⇔ NPV(A-B) =...
You are analyzing two mutually exclusive projects with the cash flows shown below. The cash flows...
You are analyzing two mutually exclusive projects with the cash flows shown below. The cash flows are in millions. Both projects are equally risky. Your costs of capital are 12%. Year Project 1 Project 2 0 -$140 -$90 1 $50 $40 2 $45 $35 3 $40 $30 4 $35 $25 5 $30 $20 6 $25 $15 7 $20 $10 8 $15 $5 9 $10 $0 10 $5 -$5 Compute the NPVs of the two projects. b. Compute the IRRs of...
Canfly Airlines is considering two mutually exclusive projects, Project A and Project B. The projects have the following cash flows (in millions of dollars):
Canfly Airlines is considering two mutually exclusive projects, Project A and Project B. The projects have the following cash flows (in millions of dollars):YearProject A Cash FlowProject B Cash Flow0-$4.0-$4.512.01.723.03.235.0?The crossover rate of the two projects’ NPV profiles is 9 percent. What is the cash flow for Project B at t = 3?
Canfly Airlines is considering two mutually exclusive projects, Project A and Project B. The projects have...
Canfly Airlines is considering two mutually exclusive projects, Project A and Project B. The projects have the following cash flows (in millions of dollars): Year Project A Cash Flow Project B Cash Flow 0 -$4.0 -$4.5 1 2.0 1.7 2 3.0 3.2 3 5.0 ? The crossover rate of the two projects’ NPV profiles is 9 percent. What is the cash flow for Project B at t = 3? (Ans: 5.79 million)
14) Cedric is considering between two mutually exclusive projects. The following table gives the cash flows...
14) Cedric is considering between two mutually exclusive projects. The following table gives the cash flows of each project: 0 1 2 3 4 A -$50 25 20 20 15 B -$100 20 40 50 60 a. If your discount rate is 6%, what are the NPVs of the two projects? b. What are the IRRs of the two projects? c. Why do IRR and NPV rank the two projects differently? NPV IRR
We have two mutually exclusive investments with the following cash flows: &n
We have two mutually exclusive investments with the following cash flows: (13 marks total) Year Investment A Investment B 0 –$100 –$100 1 10 50 2 30 40 3 50 30 4 70 20 a. Using a financial calculator, calculate the IRR for each of the investments. State your answers in percentages rounded to two decimal places. (2 marks) b. Calculate the NPV profile for each investment, using the discount rates of 0%, 5%, 10%, 15%, 20%, and 25%. Perform this task in an...
Anderson Associates is considering two mutually exclusive projects that have the following cash flows: Project A...
Anderson Associates is considering two mutually exclusive projects that have the following cash flows: Project A 1. -10,000 2. 3,000 3. 2,000 4. 6,000 5. 8,000 Project B 1. -8,000 2. 7,000 3. 3,000 4. 1,000 5. 3,000 At what cost of capital do the two projects have the same net present value? (That is, what is the crossover rate?)
Consider two mutually exclusive projects with the following cash flows: Project A is a 6 year...
Consider two mutually exclusive projects with the following cash flows: Project A is a 6 year project with initial (time 0) cash outflow of 40,000 and time 1 through 6 cash inflows of 8000,14000,13000,12000,11000,and 10000 respectively. Project B is a 3 year project with initial (time 0) cash outflow of 20,000 and time 1 through 3 cash inflows of 7000,13000, and 12000 respectively. Assuming a 11.5% cost of capital compute the NPV for project A.
A FBO is evaluating two projects that are mutually exclusive with initial investments and cash flows...
A FBO is evaluating two projects that are mutually exclusive with initial investments and cash flows as follows: Year Cash Flows (A) Cash Flows (B) 0 1 2 3 4 5 -$11,000 3,000 3,000 3,000 3,000 3,000 -$8,000 2,500 2,500 2,500 2,500 2,500 Discount rate = 3.52% What is the NPV of project (A)? 2,539 2,739 3,449 4,000
, A firm is evaluating the following two mutually exclusive, but quite profitable 2-year projects...
, A firm is evaluating the following two mutually exclusive, but quite profitable 2-year projects I and II, with cash flows at t0,1 and 2 as follows: Year t Project I Project II - $10,000 +20,000 +10,000 $10,000 +$40,000 Compute each project's NPV for r=0% and r=10%, where r= discount rate or required rate Based on the cash flow patterns for the two projects and the answer to part a), can we Using the analytical formulation of the intersection of...
14) Cedric is considering between two mutually exclusive projects. The following table gives the cash flows of each project: 0 1 2 3 4 A -$50 25 20 20 15 B -$100 20 40 50 60 a. If your discount rate is 6%, what are the NPVs of the two projects? b. What are the IRRs of the two projects? c. Why do IRR and NPV rank the two projects differently? NPV IRR
, A firm is evaluating the following two mutually exclusive, but quite profitable 2-year projects I and II, with cash flows at t0,1 and 2 as follows: Year t Project I Project II - $10,000 +20,000 +10,000 $10,000 +$40,000 Compute each project's NPV for r=0% and r=10%, where r= discount rate or required rate Based on the cash flow patterns for the two projects and the answer to part a), can we Using the analytical formulation of the intersection of...
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