1. What is the IRR for each of these projects? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) 2. If you apply the IRR decision rule, which project should the company accept? 1. Assume the required return is 12 percent. What is the NPV for each of these projects? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) -2. Which project will you choose of you apply the NPV decision rule?
1. What is the IRR for each of these projects? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) 2. If you apply the IRR decision rule, which project should the company accept? 1. Assume the required return is 12 percent. What is the NPV for each of these projects? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) -2. Which project will you choose of you apply the NPV decision rule?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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
Transcribed Image Text:Piercy, LLC, has identified the following two mutually exclusive projects:
Year
Cash Flow (A) Cash Flow (B)
-$56,000
32,000
26,000
19,000
13,200
-$56,000
19,400
23,400
28,000
25,400
1
3.
4.
a-1. What is the IRR for each of these projects? (Do not round intermediate calculations and enter
your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
a-2. If you apply the IRR decision rule, which project should the company accept?
b-1. Assume the required return is 12 percent. What is the NPV for each of these projects? (Do not
round intermediate calculations and round your answers to 2 decimal places, e.g.., 32.16.)
b-2. Which project will you choose of you apply the NPV decision rule?
c-1. Over what range of discount rates would you choose Project A? (Do not round intermediate
calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
c-2. Over what range of discount rates would you choose Project B? (Do not round intermediate
calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
At what discount rate would you be indifferent between these two projects? (Do not round
intermediate calculations and enter your answer as a percent rounded to 2 decimal places,
e.g., 32.16.)
d.
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