FIN 550 - Module 5 HW

You are a financial analyst for the Hittle Company. The director of capital budgeting has asked you to analyze two proposed capital investments, Projects X and Y. Each project has a cost of $10,000, and the cost of capital for each is 12%. The projects’ expected net cash flows are as follows: Expected Net Cash Flows Year Project X Project Y 0 −$10,000 −$10,000 1 6,500 3,500 2 3,000 3,500 3 3,000 3,500 4 1,000 3,500 a. Calculate each project’s payback period, net present value (NPV), internal rate of return (IRR), modified internal rate of return (MIRR), and profitability index (PI). b. Which project or projects should be accepted if they are independent? c. Which project should be accepted if they are mutually exclusive? d. How might a change in the cost of capital produce a conflict between the NPV and IRR rankings of these two projects? Would this conflict exist if r were 5%? (Hint: Plot the NPV profiles.) e. Why does the conflict exist?

You are a financial analyst for the Brittle Company. The director of capital budgeting has asked you to analyze two proposed capital investments: Projects X and Y. Each project has a cost of $10,000, and the cost of capital for each is 12%. The projects' expected net cash flows are shown in the table below. Expected Net Cash Flows Year Project X Project Y 0 – $10,000 – $10,000 1 6,500 3,500 2 3,000 3,500 3 3,000 3,500 4 1,000 3,500   Use the Homework Student Workbook to calculate each project's net present value (NPV), internal rate of return (IRR), modified internal rate of return (MIRR), and profitability index (PI). Which project or projects should be accepted if they are independent? Which project or projects should be accepted if they are mutually exclusive?

You are a financial analyst for the Brittle Company. The director of capital budgeting has asked you to analyze two proposed capital investments: Projects X and Y. Each project has a cost of $10,000, and the cost of capital for each is 12%. The projects' expected net cash flows are shown in the table below. Expected Net Cash Flows Year Project X Project Y 0 – $10,000 – $10,000 1 6,500 3,500 2 3,000 3,500 3 3,000 3,500 4 1,000 3,500   Which project or projects should be accepted if they are independent? Which project or projects should be accepted if they are mutually exclusive?

You are a financial analyst for the Hittle Company. The director of capital budgeting has asked you to analyze two proposed capital investments, Projects X and Y. Each project has a cost of $10,000, and the cost of capital for each is 12%. The projects' expected net cash flows are as follows: Expected Net Cash Flows Year Project X Project Y -S10,000 -$10,000 6,500 3,500 3,000 3,500 3,500 3,500 3,000 1,000 a. Calculate each project's payback period, net present value (NPV), internal rate of return (IRR), modified internal rate of return (MIRR), and profitability index (PI). b. Which project or projects should be accepted if they are independent? c. Which project should be accepted if they are mutually exclusive?

You are a financial analyst for the Vincenzo Company. The director of capital budgeting has asked you to analyze two proposed capital investments, Projects X and Y. Each project has a cost of $10,000, and the cost of capital for each project is 12%. The projects’ expected net cash flows are as follows: Expected Net Cash Flows Year                       Project X                              Project Y 0                              ($10,000)                            ($10,000) 1                             6,500                                     3,500 2                             3,000                                     3,500 3                             3,000                                     3,500 4                             1,000                                     3,500     Calculate each project’s payback period, net present value (NPV), internal rate of return (IRR), and modified internal rate of return (MIRR). Which project or projects should be accepted if they are…

You are a financial analyst for the Hittle Company. The director of capital budgeting has asked you to analyze two proposed capital investments, Projects X and Y. Each project has a cost of $10,000, and the cost of capital for each is 12% for both projects. The projects’ expected net cash flows are as follows:   Expected Net cash flows Year Project X Project Y   0 -10000 -10000   1 6350 3600   2 2988 3700   3 3145 3500   4 945 3500   Calculate each project’s payback period, net present value (NPV), internal rate of return (IRR), and profitability index (PI)

You are a financial analyst for the Waffle Company. The director of capital budgeting has asked you to analyze two proposed capital investments, Projects A and B.  Each project has a cost of $50,000, and the cost of capital for each is 10%.  The projects’ expected net cash flows are as follows:      Expected Net Cash Flows Year Project A Project B 0 ($50,000) ($50,000) 1 25,000 15,000 2 20,000 15,000 3 10,000 15,000 4 5,000 15,000 5 5,000 15,000  Which project or projects should be accepted if they are independent?

You are a financial analyst for the Waffle Company. The director of capital budgeting has asked you to analyze two proposed capital investments, Projects A and B.  Each project has a cost of $50,000, and the cost of capital for each is 10%.  The projects’ expected net cash flows are as follows:      Expected Net Cash Flows Year Project A Project B 0 ($50,000) ($50,000) 1 25,000 15,000 2 20,000 15,000 3 10,000 15,000 4 5,000 15,000 5 5,000 15,000 Which project should be accepted if they are mutually exclusive?

You are a financial analyst for the Waffle Company. The director of capital budgeting has asked you to analyze two proposed capital investments, Projects A and B.  Each project has a cost of $50,000, and the cost of capital for each is 10%.  The projects’ expected net cash flows are as follows:      Expected Net Cash Flows Year Project A Project B 0 ($50,000) ($50,000) 1 25,000 15,000 2 20,000 15,000 3 10,000 15,000 4 5,000 15,000 5 5,000 15,000 Which project will you select if your decision was based solely on the project’s payback period?

You are a financial analyst for the Waffle Company. The director of capital budgeting has asked you to analyze two proposed capital investments, Projects A and B.  Each project has a cost of $50,000, and the cost of capital for each is 10%.  The projects’ expected net cash flows are as follows:      Expected Net Cash Flows Year Project A Project B 0 ($50,000) ($50,000) 1 25,000 15,000 2 20,000 15,000 3 10,000 15,000 4 5,000 15,000 5 5,000 15,000 d. How might a change in the cost of capital produce a conflict between the NPV and IRR rankings of these two projects? Would this conflict exist if r were 6%? (Hint: Plot the NPV profiles.)

You are a financial analyst for the Waffle Company. The director of capital budgeting has asked you to analyze two proposed capital investments, Projects A and B.  Each project has a cost of $50,000, and the cost of capital for each is 10%.  The projects’ expected net cash flows are as follows:      Expected Net Cash Flows Year Project A Project B 0 ($50,000) ($50,000) 1 25,000 15,000 2 20,000 15,000 3 10,000 15,000 4 5,000 15,000 5 5,000 15,000 Calculate each project’s modified internal rate of return (MIRR), and profitability index (PI).

You are a financial analyst for the Waffle Company. The director of capital budgeting has asked you to analyze two proposed capital investments, Projects A and B.  Each project has a cost of $50,000, and the cost of capital for each is 10%. The projects’ expected net cash flows are as follows:   Expected Net Cash Flows Year Project A Project B 0 ($50,000) ($50,000) 1 25,000 15,000 2 20,000 15,000 3 10,000 15,000 4 5,000 15,000 5 5,000 15,000   Calculate each project’s payback period, net present value (NPV), internal rate of return (IRR), modified internal rate of return (MIRR), and profitability index (PI). Which project will you select if your decision was based solely on the project’s payback period? Which project or projects should be accepted if they are independent? Which project should be accepted if they are mutually exclusive? d. How might a change in the cost of capital produce a conflict between the NPV and…

You are a financial analyst for the Waffle Company. The director of capital budgeting has asked you to analyze two proposed capital investments, Projects A and B.  Each project has a cost of $50,000, and the cost of capital for each is 10%.  The projects’ expected net cash flows are as follows:      Expected Net Cash Flows Year Project A Project B 0 ($50,000) ($50,000) 1 25,000 15,000 2 20,000 15,000 3 10,000 15,000 4 5,000 15,000 5 5,000 15,000 Calculate each project’s payback period, net present value (NPV), internal rate of return (IRR), modified internal rate of return (MIRR), and profitability index (PI).

You are financial analyst for the XYZ company. The director has asked you to analyze two proposed capital investments, Project A and Project B. Each project has a cost of RM 10, 000, and the cost of capital for each project is 12 percent. The project s’ cash flows are as follows: Year Project A Project B 0 (10,000) (10,000) 1 6500 3500 2 3000 3500 3 3000 3500 4 1000 3500 Question 1: Calculate each project’s NPV. Question 2: Which project or projects should be accepted?

Need answers fo C and D

Suppose that you are working as a capital budgeting analyst in a finance department of a firm and you are going to evaluate two mutually exclusive projects by implementing different capital budgeting techniques. The cash flows for these two projects are given below. YEAR   /   CASH FLOW (A)   /CASH FLOW (B)0              -$17,000                -$17,0001               8,000                      2,0002               7,000                      5,0003               5,000                      9,0004               3,000                      9,500 a. Calculate the Payback Period of each project. Which project should you accept according to this method? Explain whether the Payback Period is or is not an appropriate method in this case. b. Suppose that the discount rate is 11%. Calculate the Net Present Values (NPV) of both projects. Which project should you accept according to NPV? Evaluate your findings. c. Calculate the Internal Rate of Returns (IRR) for both projects (use excel). Which…

You are analyzing two proposed capital investments with the following cash flows: Project X - $20,000 Year 0 1 2 3 12,530 6,360 6,360 2,020 Project Y -$20,000 6,570 6,570 6,570 The PI for project X is 6,570 The cost of capital for both projects is 10 percent. Calculate the profitability index (PI) for each project. (Do not round discount factors. Round intermediate calculations to 2 decimal places, e.g. 15.25 and final answers to 4 decimal places, e.g. 1.2527.) 1.13 and the PI for project Y is 1.04

Assume you are the chief financial officer at Lehman Memorial Hospital. The CEO has asked you to analyze two proposed capital investment Project X and project Y each project requires a net investment outlay of $10,000 and the opportunity cost of capital for each project is 14% the project's expected net cash flows are as following Year Project x Project Y 0 (10,000) (10,000) 1 6,500 3,000 2 3,000 3,000 3 3,000 3,000 4 1,000 3,000 a. Calculate each project’s payback, NPV and IRR. b. Which project is financially acceptable? Explain your answer.

QUESTIONS THREEYou are a financial Analyst for Bandari Limited. The director of capital budgeting has asked you to analyze two proposed capital investments , project a X and Y. Each project has a cost of $ 10,000 and the cost of capital for each each project is 12%. The projects expected net cash flow are as followsYEAR PROJECT X PRJECT Y0 (10,000) (10,000)1 6,500 3,5002 3,000 3,5003 3,000 3,5004 1,000 3,500For each Project, estimate;(a) Regular pay back period(b) NPV(c) MIRR(d) IRR(e) Cross over rate(f) NPV for each project using the Cross over rate estimated in part (e)(g) Assumed re-investment rate based on (i) IRR assumption(ii) NPV assumption

Use the information in the table below for the following 5 questions. A capital investment project is estimated to have the following after-tax cash flows, by year: 2 3 4 -$60,000 $20,000 $22,500 $17,500 $25,000 The company utilizes a discount rate of 15% to evaluate capital projects. You may have rounding errors in your calculations so choose the closest answer. Assume cash flows are received equally over the year. The NET PRESENT VALUE for the project shown above is: O-$4,789.25 O $1,150.33 O $0.00 O $204.90 O $1183.65 Click Save and Submit to save and submit. Click Save All Answers to save all answers.

You are analyzing two proposed capital investments with the following cash flows: Year 0 1 2 3 4 Project X - $20,000 12,230 6,360 6,360 2,020 Project Y - $20,000 The Pl for project X is 6,670 6,670 6,670 6,670 The cost of capital for both projects is 10 percent. Calculate the profitability index (PI) for each project. (Do not round discount factors. Round intermediate calculations to 2 decimal places, e.g. 15.25 and final answers to 4 decimal places, e.g. 1.2527.) 1.1266 and the PI for project Y is Which project, or projects, should be accepted if you have unlimited funds to invest? If you have unlimited funds you should invest in Which project should be accepted if they are mutually exclusive? If they are mutually exclusive you should invest in 1,0572