If the projects are mutually exclusive, I would accept project E since it has the highest net present value.
Hence, the answer is option e.
In case of any query, kindly comment on the solution
Your company has a cost of capital equal to 10%. If the following projects are mutually exclusive, and you only h...
Your company has a cost of capital equal to 10%. If the following projects are mutually exclusive, and you only have the information that is provided, which should you accept? A C Payback (years) 2 5 IRR 18% $40 20% 20% $35 12% NPV (Millions) $75 $100 A B and C B5
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...
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? Show how to calculate NPV and IRR Project Required Return Life IO NCF1-n NPV IRR Alpha 12% 10 years $50 $20 Beta 8% 5 $50 $25
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...
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...
Quattro, Inc. has the following mutually exclusive projects available. The company has historically used a four-year cutoff for projects. The required return is 11 percent. The payback for Project A is ____ while the payback for Project B is ____. The NPV for Project A is _____ while the NPV for Project B is ____. Which project, if any, should the company accept? 3.92 years; 3.64 years; $780.85; $1,211.48; accept both Projects 3.92 years; 3.79 years; -$17,108.60; $1,211.48; accept Project...
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...
Thomas Company is considering two mutually exclusive projects. The firm has a 12% cost of capital. Cash inflows Initial investment Year 1 Year 2 Year 3 Year 4 Year 5 Project A Project B $130000 $85000 $25000 $35000 $45000 $50000 $55000 $40000 $35000 $30000 $10000 $5000 Evaluate and discuss the rankings of NPV and IRR of the two projects on the basis of your finding. O A Project B should be chosen because it has a higher IRR than Project...
You are analyzing the following two mutually exclusive projects and have developed the following information. Please calculate the IRRs for the two projects and the crossover rate. (6 points) Which project should you accept if the cost of capital is 5%, and which project should you accept if the cost of capital is 10%? (4 points) year project A project B 0 -1100 -900 1 400 700 2 500 100 3 100 100 4 400 200 IRR A: ___________ IRR...
Please use Excel to solve.
NPV and IRR for Mutually Exclusive Projects 10. A company is considering two mutually exclusive projects, A and B. Project A requires an initial investment of $200, followed by cash flows of $185, $40, and $15. Project B requires an initial investment of $200, followed by cash flows of S0, $50, and $230. What is the NPV and IRR for each of the projects? Which project should the company choose? The firm's cost of capital...