17. Nast Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive,equally risky, and not repeatable. If the decision is made by choosing the project with the higher MIRR rather than the onewith the higher NPV, how much value will be forgone? Note that under some conditions choosing projects on the basis ofthe MIRR will cause S0.00 value to be lost.WACC:10.50%123CFs-S1,100$375$375$375$375CFL-$2,200$725$725$725$725a. $2.33b. $1.91c. $0.00d. S2.77e. $2.1118. Margetis Inc. carries an average inventory of $750,000. Its annual sales are $10 million, its cost of goods sold are 75%of annual sales, and its receivables collection period is twice as long as its inventory conversion period. The firm buys onterms of net 30 days, and it pays on time. Its new CFO wants to decrease the cash conversion cycle by 18 days, based on a365-day year. He believes he can reduce the average inventory to $613,739 with no effect on sales. By how much mustthe firm also reduce its accounts receivable to meet its goal in the reduction of its cash conversion cycle?a. $305,240b. $249,175c. $311,469d. $277,208e. $270,97819. Atlanta Cement, Inc. buys on terms of 2/15, net 30. It does not take discounts, and it typically pays 50 days after theinvoice date. Net purchases amount to $720,000 per year. What is the nominal annual percentage cost of its non-free tradecredit, based on a 365-day year?a. 22.56%b. 21.28%c. 18.09%d. 21.50%e. 20.22%20. Desai Inc. has the following data, in thousands. Assuming a 365-day year, what is the firm's cash conversioncycle? Round to the nearest whole day.Annual sales =Annual cost of goods sold =Inventory =Accounts receivable =S45,000$25,000$4,500$1,800Page 5

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17. Nast Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the higher MIRR rather than the one with the higher NPV, how much value will be forgone? Note that under some conditions choosing projects on the basis of the MIRR will cause S0.00 value to be lost. WACC: 10.50% 1 2 $375 3 -$1,100 $375 $375 $375 CFs CFL -$2,200 $725 $725 $725 $725 a. $2.33 b. $1.91 c. $0.00 d. $2.77 e. $2.11 18. Margetis Inc. carries an average inventory of $750,000. Its annual sales are $10 million, its cost of goods sold are 75% of annual sales, and its receivables collection period is twice as long as its inventory conversion period. The firm buys on terms of net 30 days, and it pays on time. Its new CFO wants to decrease the cash conversion cycle by 18 days, based on a

17. Nast Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the higher MIRR rather than the one with the higher NPV, how much value will be forgone? Note that under some conditions choosing projects on the basis of the MIRR will cause S0.00 value to be lost. WACC: 10.50% 1 2 $375 3 -$1,100 $375 $375 $375 CFs CFL -$2,200 $725 $725 $725 $725 a. $2.33 b. $1.91 c. $0.00 d. $2.77 e. $2.11 18. Margetis Inc. carries an average inventory of $750,000. Its annual sales are $10 million, its cost of goods sold are 75% of annual sales, and its receivables collection period is twice as long as its inventory conversion period. The firm buys on terms of net 30 days, and it pays on time. Its new CFO wants to decrease the cash conversion cycle by 18 days, based on a

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 11P

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2. Nast Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the higher MIRR rather than the one with the higher NPV, how much value will be forgone? Note that under some conditions choosing projects on the basis of the MIRR will cause $0.00 value to be lost. WACC: 8.00% 1 2 3 4 CFS -$1,100 $375 $375 $375 $375 CFL -$2,200 $725 $725 $725 $725 a. $50.95 b. $66.95 c. $59.24 d. $47.40 e. $72.28
Nast Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the higher MIRR rather than the one with the higher NPV, how much value will be forgone? Note that under some conditions choosing projects on the basis of the MIRR will cause $0.00 value to be lost. WACC: 7.00% 0 1 3 CFS -$1,100 $375 $375 $375 $375 CFL -$2,200 $725 $725 $725 $725 Group of answer choices $88.94 $94.93 $85.52 $93.22 $66.71 2 4
WorldTrans is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the shorter payback, some value may be forgone. How much value will be lost in this instance? Note that under some conditions choosing projects on the basis of the shorter payback will not cause value to be lost. WACC: 14.25% 0 1 2 3 4 CFS -$950 $500 $800 $0 $0 CFL -$2,100 $400 $800 $800 $1,000 Group of answer choices $127.87 $95.90 $93.62 $116.46 $0.00
Yonan Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the shorter payback, some value may be forgone. How much value will be lost in this instance? Note that under some conditions choosing projects on the basis of the shorter payback will not cause value to be lost. WACC: 14.25% 0 1 2 3 4 CFS -$950 $500 $800 $0 $0 CFL -$2,100 $400 $800 $800 $1,000 G $93.62 $95.90 $127.87 $0.00 $116.46
Yonan Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the shorter payback, some value may be forgone. How much value will be lost in this instance? Note that under some conditions choosing projects on the basis of the shorter payback will not cause value to be lost. WACC: 10.25% 0 1 2 3 4 CFS -$800 $650 $350 $0 $0 CFL -$1,900 $550 $600 $600 $840 Please explain and show calculations.
Nast Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the higher MIRR rather than the one with the higher NPV, how much value will be forgone? Note that under some conditions choosing projects on the basis of the MIRR will cause $0.00 value to be lost. O WACC: CFS CFL O a. $199.41 O b. $0.00 O c. $109.03 O d. $7.51 Oe. $8.32 10.75% 0 -$1,100 -$2,200 1 $375 $725 2 $375 $725 3 $375 $725 st 4 $375 $725
Kosovski Company is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and are not repeatable. If the decision is made by choosing the project with the higher IRR, how much value will be forgone? Note that under some conditions choosing projects on the basis of the IRR will cause $0.00 value to be lost. WACC: 10.75% 0 1 2 3 4 CFS -$775 $560 $535 CFL -$775 $315 $315 $315 $315 Please explain the process and provide calculations.
39. Deyland Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the higher MIRR rather than the one with the higher NPV, how much value will be forgone? Note that under some conditions choosing projects on the basis of the MIRR will cause $0.00 value to be lost. WACC = 9%. Year 0 a. $24.71 b. $27.46 c. $30.51 d. $33.90 e. $37.29 1 2 3 4 CF, -$1,100 $375 $375 $375 $375 CF₂ $2,200 $725 $725 $725 $725
the Kosovski Company is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and are not repeatable. If decision is made by choosing the project with the higher IRR, how much value will be forgone? Note that under some conditions choosing projects on the basis of the IRR will cause $0.00 value to be lost. WACC: CFS CFL a. $35.69 b. $29.26 c. $31.31 d. $26.33 e. $34.82 6.25% 0 -$1,050 -$1,050 1 $675 $360 2 $650 $360 3 $360 4 $360
Yonan Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. If the decision is made by choosing the project with the shorter payback, some value may be forgone. How much value will be lost in this instance? Note that under some conditions choosing projects on the basis of the shorter payback will not cause value to be lost. WACC: CFS CFL a. $86.52 b. $79.55 O c. $350.33 Od. $490.00 Oe. $0.00 8.75% 0 -$800 -$1,900 1 $650 $550 2 $350 $600 3 $0 $600 4 $0 $840
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15. Which of the following statements is CORRECT? Assume that the project being considered has normal cash flows, with one outflow followed by a series of inflows Group of answer choices The lower the WACC used to calculate it, the lower the calculated NPV will be. If a project's NPV is less than zero, then its IRR must be less than the WACC. The NPV of a relatively low-risk project should be found using a relatively high WACC. A project's NPV is found by compounding the cash inflows at the IRR to find the terminal value (TV), then discounting the TV at the WACC. If a project's NPV is greater than zero, then its IRR must be less than zero.