A firm with a WACC of 10% is considering the following mutually exclusive projects:1235+ㅓProject 1Project 2-$300$60$60$60$175$175-$550$250$250$150 $150 $150Which project would you recommend?Select the correct answer.Oa. Both Projects 1 and 2, since both projects have NPV's > 0.Ob. Both Projects 1 and 2, since both projects have IRR's > 0.Oc. Project 2, since the NPV2 > NPV1.Od. Neither Project 1 nor 2, since each project's NPV < 0.Oe. Project 1, since the NPV1 > NPV2.

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Answered: A firm with a WACC of 10% is…

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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Problem 6.a: A manufacturing firm is considering the mutually exclusive alternatives given in the table below. Determine the IRR on incremental investment (IRR of the difference). do not use % sign in your answer n 0 1 2 Net Cash Flow Project A1 - $4,000 2,600 2,800 Project A2 - $5,000 3,600 3,200
A firm with a WACC of 10% is considering the following mutually exclusive projects: 0 1 2 Project 1 -$500 $40 Project 2 -$500 Which project would you recommend? $40 $200 $200 3 $40 $130 4 $240 $130 5 $240 $130 Select the correct answer. Oa. Project 2, since the NPV₂ > NPV1. Ob. Both Projects 1 and 2, since both projects have IRR's > 0. Oc. Project 1, since the NPV₁ > NPV2. Od. Neither Project 1 nor 2, since each project's NPV 0.
an.3 answer must be in proper format or i will give down vote
You are evaluating two mutually exclusive projects. Period Project X Project Y 0 - $5,000 - $4,000 1 $ 3,250 $3,250 2 $3,250 $2,000 IRR 19.43 % 22.17% If your firm has a cost of capital of 10%, which project should you select? Group of answer choices Project X Project Y Insufficient information to provide an answer
Refer to the table below to answer the following question. Project Initial Investment NPV IP 200 22 Q 180 26 IR 185 38 IS 380 10 The project with highest Profitability Index is Project P Project Q Project R Project S
A firm evaluates all of its projects by applying the IRR rule. If the required return is 18 percent, will the firm accept the following project?CF0 = -$30,000CO1 = $20,000C02 = $14,000C03 = $11,000 yes or no
1.
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Consider the following two projects: Cash flows Project A Project B C0�0 −$ 240 −$ 240 C1�1 100 123 C2�2 100 123 C3�3 100 123 C4�4 100 a. If the opportunity cost of capital is 8%, which of these two projects would you accept (A, B, or both)? b. Suppose that you can choose only one of these two projects. Which would you choose? The discount rate is still 8%. c. Which one would you choose if the cost of capital is 16%? d. What is the payback period of each project? e. Is the project with the shortest payback period also the one with the highest NPV? f. What are the internal rates of return on the two projects? g. Does the IRR rule in this case give the same answer as NPV? h. If the opportunity cost of capital is 8%, what is the profitability index for each project? i. Is the project with the highest profitability index also the one with the highest NPV? j. Which measure should you use to choose between the projects?
8. NPV profiles An NPV profile plots a project's NPV at various costs of capital. An example NPV profile is shown below: Identify the range of costs of capital that a firm would use to accept and reject this project, and answer the questions that follow. NPV (Dollars) 600 500 400 300 200 100 0 ← -100 -200 -300 A 2 4 6 8 10 12 14 16 DISCOUNT (REQUIRED) RATE (Percent) The project represented by triangle A should be B 18 20 This NPV profile demonstrates that as the cost of capital increases, the project's NPV ?
A firm with a WACC of 10% is considering the following mutually exclusive projects: 0 1 2 3 4 5 Project 1 -$450 $50 $50 $50 $200 $200 Project 2 -$550 $200 $200 $150 $150 $150 Which project would you recommend? Select the correct answer. a. Both Projects 1 and 2, since both projects have IRR's > 0. b. Neither Project 1 nor 2, since each project's NPV < 0. c. Both Projects 1 and 2, since both projects have NPV's > 0. d. Project 1, since the NPV1 > NPV2. e. Project 2, since the NPV2 > NPV1.
Project A: IRR = 4%, Initial cost =100, NPV = 200 Project B: IRR = 14%, Initial cost =200, NPV = 230 Project C: IRR = 6%, Initial cost = 300, NPV = 300 Project D: IRR = 22%, Initial cost = 100, NPV = 260 If you can only choose 1 of the above projects above, which one should you choose? Project A Project B Project C Project D Not enough information to determine which project is preferred

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