Question

please answer all parts a-d

X P11-24 (similar to) . The firm's cost of it . 15.25, and the streer, Reis 10.2% Risk-adjusted discount rates Basic Country Wi e rs is considering investing in one of three mutually exclusive projects, EFand The firm has gathered the following basic cash flow and index data for each project Find the NPV) of each project using the cost of capital which project is preferred in this situation? b. The uses the towing equation to determine the count R ADR for each project RADR-R R )*(r-R) where Rysk.free rate of return, RJ risk index for project and cost of capital Substitute each project's risk index into this equation to determines RADR c. Use the RADR for each project to determine its isadusted NPV. Which project is preferable in this situation? d. Compare and discuss your findings in parts (a) and (c). Which project do you recommend that the firm accept? Data Table (Chick on the icon located on the top-right corner of the datatable below in order to copy contents into a spreadsheet) Project ) $14.900 Initial investment (CF) Year ) $5,300 6300 6.300 6.300 $11.000 $19.600 Cash inflows (CF) $6,000 $4.300 4 000 5.100 4.800 7100 2.000 11,000 0.99 02 Clear Al Risk index (R) 1 84 Check Answer

Answer 1

1.
=-14900+6300/1.152+6300/1.152^2+6300/1.152^3+6300/1.152^4=3013.84007541568

2.
=-11000+6000/1.152+4000/1.152^2+4600/1.152^3+2000/1.152^4=1366.85026238885

3.
=-19600+4300/1.152+5100/1.152^2+7300/1.152^3+11000/1.152^4=-1003.77055724716

Accept Project E

4.
=10.2%+(15.2%-10.2%)*1.84=19.40000%

5.
=10.2%+(15.2%-10.2%)*0.99=15.15000%

6.
=10.2%+(15.2%-10.2%)*0.62=13.30000%

7.
=-14900+6300/1.194+6300/1.194^2+6300/1.194^3+6300/1.194^4=1596.26008027444

8.
=-11000+6000/1.1515+4000/1.1515^2+4600/1.1515^3+2000/1.1515^4=1377.62472033939

9.
=-19600+4300/1.133+5100/1.133^2+7300/1.133^3+11000/1.133^4=-137.322349094723

Accept Project E

10.
Accept Project E