Is NPV an acceptable method when comparing two mutually exclusive projects?
Is NPV an acceptable method when comparing two mutually exclusive projects?
Homework Answers
Yes. NPV is best and most widely used method for comparing two mutually exclusive projects. That project will be chosen, which produce higher NPV. NPV is the amount by which value of Firm increases if Investment is made.
So project having Higher positive NPV will be selected. Project having negative NPV can never be selected.
That's why NPV is widely acceptable method when comparing two mutually exclusive projects
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Is NPV an acceptable method when comparing two mutually exclusive projects?
(Mutually exclusive projects and NPV) You have been assigned the task of evaluating two mutually exclusive...
(Mutually exclusive projects and NPV) You have been assigned the task of evaluating two mutually exclusive projects with the following projected cash flows: Year Project A Project B Cash Flow Cash Flow $(102,000) $(102,000) 40,000 40.000 40.000 40,000 0 40,000 215,000 If the appropriate discount rate on these projects is 9 percent, which would be chosen and why? The NPV of Project Ass (Round to the nearest cont.)
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.
Question 2 (1 point) 1. Conflicts between two mutually exclusive projects, where the NPV method chooses...
Question 2 (1 point) 1. Conflicts between two mutually exclusive projects, where the NPV method chooses one project but the IRR method chooses the other, should generally be resolved in favor of the project with the higher NPV. 5 True False Question 3 (1 point) If a project's NPV is negative, then its payback must be longer that its economic life True False
When choosing among mutually exclusive projects we choose the project with the highest NPV. True or...
When choosing among mutually exclusive projects we choose the project with the highest NPV. True or False
is this right? NPV and IRR can provide contradictory decisions for mutually exclusive projects when the...
is this right?
NPV and IRR can provide contradictory decisions for mutually exclusive projects when the discount rates on the projects may differ. the scale of the projects may differ. the risk of the projects may differ. all of the above. Question 16 (2 points) Saved AVANA CALnan hand.
Imagine that two mutually exclusive projects have yielded NPV, PI, and IRR estimations as shown in...
Imagine that two mutually exclusive projects have yielded NPV, PI, and IRR estimations as shown in the table below: Decision Method Project SDX Project TGL NPV $2,100.87 $2,099.13 PI 1.68 1.44 IRR 14.56% 19.76% Suppose that the minimum required rate of return is 10.00% for both projects. Based on the capital budgeting decision methods presented in the data table above, determine the better alternative project to invest in. Group of answer choices 1) Project TGL 2)Project SDX 3)Neither one of...
You are comparing two mutually exclusive projects. Both projects have an initial cost of $43,500 ....
You are comparing two mutually exclusive projects. Both projects have an initial cost of $43,500 . Project A has cash inflows of $24,500 , $21,500 , and $18,500 over the next 3 years, respectively. Project B has cash inflows of $13,500 , $16,900 and $39,500 over the next 3 years. What is the crossover rate for Projects A and B? 19.54 percent 20.56 percent 20.30 percent 18.83 percent
Please use Excel to solve. NPV and IRR for Mutually Exclusive Projects 10. A company is...
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...
In general, if two mutually exclusive projects are being compared and one has higher NPV than...
In general, if two mutually exclusive projects are being compared and one has higher NPV than the other, but other one has higher IRR which one should the company choose? A. the one with the higher NPV B. The one with the higher IRR
Crossover and NPV. Seether, Inc., has the following two mutually exclusive projects available. Year Project R...
Crossover and NPV. Seether, Inc., has the following two mutually exclusive projects available. Year Project R Projects -$45,000 17,000 19,000 21,000 9,000 7,000 -$76,000 20,000 20,000 35,000 30,000 10,000 What is the crossover rate for these two projects? What is the NPV of each project at the crossover rate?
(Mutually exclusive projects and NPV) You have been assigned the task of evaluating two mutually exclusive projects with the following projected cash flows: Year Project A Project B Cash Flow Cash Flow $(102,000) $(102,000) 40,000 40.000 40.000 40,000 0 40,000 215,000 If the appropriate discount rate on these projects is 9 percent, which would be chosen and why? The NPV of Project Ass (Round to the nearest cont.)
Question 2 (1 point) 1. Conflicts between two mutually exclusive projects, where the NPV method chooses one project but the IRR method chooses the other, should generally be resolved in favor of the project with the higher NPV. 5 True False Question 3 (1 point) If a project's NPV is negative, then its payback must be longer that its economic life True False
is this right?
NPV and IRR can provide contradictory decisions for mutually exclusive projects when the discount rates on the projects may differ. the scale of the projects may differ. the risk of the projects may differ. all of the above. Question 16 (2 points) Saved AVANA CALnan hand.
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...
Crossover and NPV. Seether, Inc., has the following two mutually exclusive projects available. Year Project R Projects -$45,000 17,000 19,000 21,000 9,000 7,000 -$76,000 20,000 20,000 35,000 30,000 10,000 What is the crossover rate for these two projects? What is the NPV of each project at the crossover rate?
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